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Cash subsidy policy keeps pace with changes resulting from economic reform: minister of social solidarity - Daily News Egypt

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Cash subsidy policy keeps pace with changes resulting from economic reform: minister of social solidarity

Expanding six programmes complementary to ‘Takaful and Karama’ amounting to EGP 655m

The Ministry of Social Solidarity is working to address the changes resulting from the economic reform programme by increasing the number of beneficiaries of social protection and expanding the base of the beneficiaries to six programmes supplementing the programme of Takaful and Karama at a cost of EGP 655m.

Two years ago, Egypt has embarked on a comprehensive programme of economic reform in cooperation with the International Monetary Fund (IMF) including the structure of the system of subsidy and floating the Egyptian pound, which caused price hikes that the government now tries to curb through social protection programmes.

Minister of Social Solidarity Ghada Waly, said the ministry’s subsidies strategy matches the economic reform policies and social protection.

Daily News Egypt sat down for an interview with Waly, whereby she said they have a database of 25 million poor people, which is renewed on a regular basis, expecting the number to reach 30 million people by the end of the year. The transcript for which is below, lightly edited:

Waly explained that the ministry reviews the list of beneficiaries every three years to move them from protection to production, onwards into providing jobs and micro loans.

At the end of June, the number of social security pension beneficiaries reached 1.6 million families, in addition to 2.25 million families, under the Takaful and Karama programme.

Takaful beneficiaries’ amount to 1.95 million families, as well as 300,000 families under Karama programme. The cost of the programme, since its inception in 2015, has reached EGP 21bn, including 85% from the state budget and 15% from a World Bank loan.

She pointed out that the ministry intends to issue a new law that includes all kinds of cash subsidies under a unified legislative umbrella, aimed at establishing a unified and integrated database for poor families and households close to the poverty line.

The integration process also aims to apply the conditionality of health and education to the beneficiaries of social security, investment in childhood, and applying the rules of statistical targeting to determine the degrees of poverty of families and seek to link them with suitable work opportunities.

She highlighted seven programmes to complement Takaful and Karama, namely: Forsa, Sakan Karim” (Decent Housing) , Mastoura, Producing Families at a cost of EGP 665m.

Moreover, Forsa (opportunity) programme aims to provide training and employment opportunities to people capable of working in target communities, to raise the standards of living and productivity of local community in addition to curbing unemployment, she elaborated.

The programme provides 70,000 jobs. In addition, a number of cooperation protocols have been signed with a number of private companies., whereby the ministry has prioritised beneficiaries of Takaful and Karama programme and special needs.

As for Sakan Karim programme, it aims to improve the quality of buildings that lack infrastructure. Support amounts to EGP 4,000-25,000 through delivering water and sanitation, as well as reinforcing walls. It is funded by the Association Support Fund at the ministry worth EGP 225m. The programme has helped 26,000 households at a cost of EGP 180m.

The minister estimated the total funds for pensions at EGP 841bn to June 2018, including EGP 361bn of unmovable Sukuk at the public treasury with a return of 9%, as well as EGP 57bn at the National Investment Bank with a return of 11%.

Tradable treasury bonds have reached EGP 89.304bn, accounting for 45.3%, while treasury bills were estimated at EGP 49.577bn.

Waly said that investments of securities portfolios are estimated at EGP 5.232bn, accounting for 2.6% of direct investments and 0.6% of pension funds.

The value of securities have reached EGP 6.645bn, accounting for 3.3% of total investments and 0.7% of pension funds.

Meanwhile, value of investment funds securities at the end of the last fiscal year reached EGP 1.598bn and value of Suez Canal certificates reached EGP 3.107bn.

Waly said that debts at public treasury reached EGP 226bn, where the Social Insurance Authority was able to reschedule EGP 93bn of debts.

Moreover, the minister pointed out that they are in the process of issuing Sukuk for the debts through to 2028, in addition to EGP 25bn that have been audited, along with EGP 108bn being audited now.

Waly added that the state is following a reform policy, especially, in the past four years, where pensions were increased by 87.5% for 9.5 million beneficiaries at a cost of EGP 73bn.

A minimum of EGP 500 for pensions was imposed since July 2016, while the minimum pension was raised recently to EGP 750 per month, she noted, additionally she referred the completion of the draft unified social insurance law, and sent it to the Ministry of Finance for review in preparation for its submission to the cabinet within weeks to be ratified during the coming parliamentary session.

The current social insurance laws would be integrated into a unified law, in line with the constitutional provisions and the observance of international conventions in the field of social insurance, she said, adding, the new law aims to preserve all the rights acquired by citizens under the current social insurance laws, as well as comprehensive wage insurance through the collection of basic and variable wages, and set a minimum wage for insurance contribution that commensurate with the minimum income in accordance with the Labour Law.

Waly added that the maximum of insurance wage will be increased to match the real wages of public employees and to calculate pensions based on the total average wage throughout the subscription period, in addition to reassessing the previous wages for beneficiaries based on the inflation.

Meanwhile, the law will work to set a minimum pension in view of the financial capacity of the social insurance system and address the impact of inflation on pensions through the annual increase of annual pensions, which contributes to raising the standard of living for beneficiaries, Waly explained.

Furthermore, the minister said that the law also regulates the relationship between the Social Insurance Authority and the State Treasury, leading to the dissolution of financial interrelations between them, and access to the financial sustainability of the insurance system and pensions.

She added that an independent entity would be established to invest social insurance funds, in accordance with international standards in the field of investment of pension funds.

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