Egyptian government may resort to Zakat funds to cover its deficit

A board member of the newly formed Egyptian Zakat and Sadaqah Fund, Momtaz El-Saeed, has confirmed that the government is considering investing Zakat money, and as Al-Araby Al-Jadid news website reported on Thursday, this has raised fears amongst economic analysts and those working in the charity sector that the government will try to seize this money, estimated to be around $2.5 billion, in order to cover the growing budget deficit instead of allowing it to be spent on the poor.

According to Al-Araby Al-Jadeed, Egyptian President Abdel Fattah Al-Sisi ordered the establishment of the fund in September under the supervision of the Grand Sheikh of Al-Azhar. The board members include a number of experts, economists and public figures.

Anadolu news agency had earlier quoted a board member as saying that the board was discussing plans for managing the Zakat funds and investing them in banks that generate revenue. The board member also noted that restrictions would be imposed on the spending of these funds.

Last year, Dar Al-Ifta Al-Misriyyah issued a fatwa allowing the use of Zakat and Sadaqah funds for “projects generating social revenue” for the country. El-Saeed argued that, “these funds must be put to use, rather than leaving them without being invested or granting them to parties that cannot manage them.” However, he also noted that it is too early to determine how the money would be spent before a clear vision is formed for the Zakat and Sadaqah Fund’s work.

Economic analysts fear that the government will use these funds to cover part of the budget deficit for this fiscal year, which began in July 2014.

Economic analyst Ahmed Ibrahim told Al-Araby Al-Jadeed that the government is facing a problem with having liquid assets to cover the budget deficit, especially after exhausting all means of domestic loans and knocking on the doors of Gulf donors.

It is worth noting that Saudi Arabia, Kuwait, and the UAE have all provided financial aid to Egypt since the overthrow of President Mohamed Morsi, support estimated by the Ministry of Finance to be about $11 billion, while the current president says it is over $20 billion.

According to one charity official, who requested anonymity, the government has already started seizing charity funds after it freezed thousands of charities late last year. He also noted that the poor are the ones suffering from the government’s policies, especially since there are serious doubts and concerns regarding Zakat money reaching those in need.