Extra LE 21.3B allocated to pensions in new budget



Tue, 20 Jun 2017 - 09:28 GMT


Tue, 20 Jun 2017 - 09:28 GMT

Minister of Finance Amr El Garhy - File Photo

Minister of Finance Amr El Garhy - File Photo

CAIRO –20 June 2017: Minister of Social Solidarity Ghada Wali stated on Monday that the cost of increasing pensions by 15 percent is LE 21.3 billion ($1.1 billion) while the amount allocated to pensions in the new fiscal year’s budget is LE 150 billion.

Wali added that two million citizens will benefit from a 30 percent increase in their pensions due to setting LE 150 as a minimum for the increase, while five million will receive the 15 percent increase.

The minister’s statements came in the general assembly at the Parliament held to discuss a draft law proposed by the government to increase pensions by 15 percent with a minimum of LE 150 and to amend certain articles in the social insurance law.

In the same session, Minister of Finance Amr El-Garhy said that the proposal of setting a minimum for the pension increase was approved by President Abdel Fatah al-Sisi.
Wali explained that pensions increased by 57 percent since 2011 as they were LE 45 billion and that beneficiaries are 9.3 million.

Those decisions are attempts to make social security networks compatible with the impact of the Structural Adjustment Program (SAP) implemented by Egypt in exchange for loans from the Bretton Woods institutions, the World Bank and the International Monetary Fund (IMF).

On November 3, 2016, the Central Bank of Egypt (CBE) issued the decision to float the Egyptian currency, which incurred the rise in costs of raw material and imported goods, and thus the increase in prices.

Inflation rates rose from 20.7 percent in November 2016 to 30.5 percent in May 2017.
In August 2016, Parliament approved the Value Added Tax (VAT) law applied on goods and services. It started at a value of 13 percent last year to become 14 percent this year.
In parallel, there are plans to cancel subsidies on goods gradually, especially fuel, while shifting to monetary subsidies to achieve greater efficiency.

Monetary subsidies are delivered to beneficiaries of poor families enrolled on a recent program adopted by the Ministry of Cooperation called Takafol Wa karama (Solidarity and Dignity) launched two years ago.

The Ministry is helping children of these families find job opportunities matching their qualifications through a program called Forsa (Opportunity). That is in addition to expansion in micro financing of projects.

El-Garhy announced in May the measures taken to ease the inflation impact on citizens at a cost of LE 46 billion by increasing pensions of all recipients and wages of public sector employees, while exempting citizens in the first income category (less than LE 7,200 per year) from income taxes.

Citizens in the second income category (LE 7,200 to LE 30,000 per year) receive 80 percent exemption from income taxes, while those whose income is between LE 30,000 and LE 45,000 per year get 40 percent exemption. Finally, citizens achieving high income between LE 45,000 and LE 200,000 per year get only a five percent exemption.



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