Minister of Finance Hany Kadry Dimian has issued two treasury bonds from the state treasury for the benefit of social insurance funds in the public sector, and the public and private business sector, amounting to EGP 14.1bn, with a 9% interest rate.
The treasury bonds represent the fifth tranche of the agreement between the Ministries of Finance and Social Solidarity to settle “unfixed debt” on the state treasury for both social insurance funds, to finance the cost of the annual increase in pension funds, a Tuesday statement from the Finance Ministry said.
Dimian explained that the lifetime of the two treasury bonds is five years, with an ability to be renewed for a similar period. The value of the bond of the social insurance fund of workers in the public sector is EGP 7.7bn, compared to EGP 6.4bn worth of the bond of workers in public and private business sector.
According to the statement, the Ministry of Finance has issued treasury bonds amounting to EGP 205.4bn for the benefit of both the insurance and pensions fund over the past few years.
The Ministry of Finance was accused of owing pensioners EGP 600bn, since the National Investment Bank (NIB), a state bank managing public investment, had lent this money to governmental agencies “without repaying it to pensioners”, according to Pensioners’ Solidarity Syndicate.
According to Law 119/1980, pensions and insurance funds are committed to depositing their surplus fund into the NIB, which uses these funds to finance the investments of state agencies. However, the finance ministry had stated earlier that pensions and insurance funds from 1980 until 2006 have not exceeded EGP 69bn.
Mervat El-Tallawi, former minister of social insurances, which was dissolved in 2005, said earlier in 2014 that the total debt of the state’s treasury to the pension and insurances funds was valued at EGP 435bn.
Annual increases to improve the status of pensioners have put an EGP 174.3bn burden on the annual budget from fiscal year 1980/1981 until 2012/2013, according to the ministry.
In 2014, the interim government at the time decided to increase social solidarity pensions for low-income citizens by 50%.
Expenditure on employees’ wages and compensation and debt services, grants and social benefits, amounted to 80.2% of expenses in the FY 2015/2016 state budget, or EGP 864bn.