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Sunday, 20 September 2020

Parliament committee approves 3 laws to contain economic impact of coronavirus

The three laws are expected to be approved by parliament when MPs reconvene in a plenary session on Sunday

Gamal Essam El-Din , Wednesday 1 Jul 2020
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File photo: Egyptian parliament (Photo: Reuters)
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The Egyptian parliament's budget committee approved on Wednesday three government-drafted laws aiming to mitigate the negative economic impact of the coronavirus pandemic on state coffers.

The first law will earmark an additional allocation of EGP 80 billion to the new state 2020/21 budget.

Minister of Finance Mohamed Maait told the committee members that the new allocation is necessary to settle part of the Ministry of Electricity’s debts to the Ministry of Petroleum.

"These debts have reached a total of EGP 102 billion, and we want to use the additional budgetary allocation to settle part of this debt," said Maait.

He said that part of the new allocation will be used to also pay part of a total EGP 160.5 billion in government instalments that are due to the Insurance and Pension Authority.

Maait said the breakout of the coronavirus has made it difficult for the 2020/21 budget to settle the abovementioned payments, and so it was necessary to earmark the additional allocation of EGP 80 billion to do so.

Parliament’s budget committee also approved a new law aimed at setting up a mutual fund to mitigate the negative impact of pandemics and viruses.

Minister Maait said that the law, which is officially called the Mutual Support Contribution Fund to Mitigate the Economic Consequences of the Spread of Pandemics, aims to generate additional revenue necessary to contain the economic impact of the coronavirus.

Article 1 of the draft law states that 1 percent will be deducted from the monthly net income of each state employee, beginning from 1 July and lasting one year. Article 2 states that 0.5 percent of the net pension of each retired employee will be also deducted beginning from 1 July and for one month.

However, the draft law says that state employees and pensioners who receive less than EGP 2,000 in net income per month will be exempted from this deduction.

Minister Maait said these deductions will generate between EGP 8 billion and EGP 10 billion in revenue.

"They will be put in a takaful mutual support fund to help the state meet some of its social obligations," said Maait.

Maait said the coronavirus has negatively impacted state revenues and put a tremendous squeeze on the budget.

"Please also remember that the new 2020/21 budget has already allocated EGP 34 billion to increase the salaries of state employees in the new fiscal year," said Maait, arguing that the above obligations and other financial pressures compelled the government to submit the draft law on the mutual support fund.

The budget committee also approved an amendment to the law on Radio and Wireless Devices (law 77/1968). The draft law makes it mandatory for owners of cars equipped with electronic or recreational devices to pay an annual fee of EGP 100.

The law states that 40 percent of the generated fees will go to the National Media Organisation in charge of supervising state radio and television.

"Ten percent will go to the traffic authority, which is affiliated with the interior ministry, 10 percent to other authorities supervising radio and wireless devices, and 40 percent to the finance ministry, " said the draft amendment.

The parliament’s budget committee also approved a law that allows the finance ministry to offer EGP 3 billion in guarantees to the Water Holding Company to help it implement its drinking water and desalination projects.

 

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