Gold Coins - CC via pixabay/Brett_Hondow
CAIRO - 14 July 2019: The draft new social insurance and pensions bill prepared by the government and approved in principle by the House of Representatives last week includes mechanisms and measures that would resolve the existing and future debt crises between the Treasury Authority and the National Social Insurance Authority.
The key features pertinent to conflict resolution are:
The Treasury Authority pays to the National Social Insurance Authority a sum that increases annually by 5.7 percent for 50 years and that starts with LE 160.5 billion.
The sum paid monthly will start with LE 13 billion and will increase by 5.7 percent.
That is to pay back the debt worth LE 642 billion owed by the Treasury Authority to the National Social Insurance Authority. The breakdown includes LE 367.4 worth of bonds, and LE 216 worth of debts.
On the other hand, the National Social Insurance Authority fulfills the Treasury Authority’s present and future duties owed to pensioners, and covers the annual pension increase.
If the Treasury Authority fails to pay the due amount by the end of each month, it will have to pay interest. In case of default for three consecutive months, the matter is raised to the Cabinet.
Also, the Ministry of Finance has to declare its commitment to pay back the overdue amount in a report submitted with the annual draft budget to the House of Representatives. Otherwise, it would not be possible to pass the draft.
The Social Insurance Fund has to conduct a new actuarial study that determines if the value of the aforementioned installments over 30 years will be sufficient to pay back the debt.
In case the National Social Insurance Authority fails to pay the amounts due to pensioners, the Treasury Authority has to fulfill its duties instead as long as the former institution pays back later. That should be upon an agreement among the chairpersons of each authority, the minister of finance, and the prime minister.