Finance Minister: Budget will bear cost of raise in salaries and pensions

Finance Minister Momtaz al-Saeed has said that the state budget will bear the cost of the social allowance for salaries of government employees and for both civilian and military pensions, amounting to LE3.5 billion as of July.

Earlier, President Mohamed Morsy ordered a 15 percent increase in the pensions of the armed forces instead of the 10 percent that was approved by the Cabinet on Sunday, thereby putting them on par with government employees, whose pay increase he approved on Sunday.

Acting presidential spokesperson Yasser Ali explained that the increase would be paid from domestic resources and not external borrowing.

Saeed added that the ministry is also studying ways to carry out the president’s decision to increase the social security pension from LE200 to LE300 per month, depending on the number of family members.

He also said the Supreme Council of the Armed Forces has endorsed the state budget for the 2012/13 fiscal year, the laws for the economic and social development plans and the budget allocations for 50 economic authorities in addition to the Military Production Authority.

He added that government spending and subsidies of petroleum products would be cut by LE25 billion without affecting low-income brackets, denying the possibility of raising fuel prices or imposing new taxes.

“The president has asked the government to focus for the first 100 days on traffic, garbage, security and bread supply,” Saeed said, pointing out that those would not need extra funding. “They need new administrative procedures and the enforcement of the law.”

He also said that 400,000 temporary employees would be granted full time contracts to be financed from special funds.

On the US$3.2 billion loan from the International Monetary Fund, the minister said it was postponed until a new civilian government is formed. “But the terms and procedures are agreed upon,” he said.

Morsy has also instructed the current government and governors to continue until a new government is formed, acting presidential spokesperson Yasser Ali said.

“This does not mean the new government would be delayed,” said Ali. “The president is keen on achieving stability and restoring the economy rapidly.”