Around 10 million low-income ration card beneficiaries will be getting financial assistance of LE125 to LE250 depending on the size of the family during Ramadan and once again during Eid Al-Fitr as part of a newly announced social protection package.
The package includes measures that will be implemented in the new fiscal year starting in July, and others that will be in force between March and July.
The holy month will also witness the 5.2 million families included in the Takaful and Karama social protection programmes receiving one-off assistance of LE300.
The wide-ranging new package announced by Prime Minister Mustafa Madbouli last week includes an increase of 17 per cent in the minimum wage of public sector workers to reach LE7,000 starting in July, also the starting date for pensioners to receive a 15 per cent increase in their pensions.
State employees and workers in state economic entities will receive monthly increases ranging from LE1,000 to LE1,200, depending on job grade. An additional LE15 billion has been allocated to enhance the salaries of doctors, nurses, teachers, and university faculty members.
The increases in wages and pensions will cost the state LE85 billion, said Ahmed Kouchok, the minister of finance, who added that 4.5 million state employees and 13 million pensioners will benefit from the increases.
This is in addition to permanent increases of 25 per cent in the monthly allowances of Takaful and Karama beneficiaries, with the starting date any time between March and July. Irregular workers will be granted a bonus of LE1,500 six times a year.
As part of the new package, the government will establish a LE10 billion economic empowerment fund to create job opportunities for youth, equip them for the labour market, and support entrepreneurial ventures, Kouchok said.
A Finance Ministry statement added that the new package includes a LE3 billion allocation to treat 60,000 patients on limited incomes at government expense, in addition to another LE3 billion to treat the most needy who are not covered by any kind of medical insurance during a three-month period starting this month.
Mohamed Abu Basha, chief economist at investment bank EFG Hermes, believes the new package will not lead to an increase in the budget deficit, saying that some of its items, such as periodic salary increases and pension raises, were already factored into the budget, while others are financed through budgetary reserves.
He noted that the government has sought to diversify the spending in the new package to implement various forms of support, including ration card subsidies, salary increases, cash assistance, and healthcare services.
While these measures offer some relief to low-income households, the increases remain below the rate of inflation, particularly given the cumulative rise in prices over the past two years, he said.
Achieving income parity with inflationary pressures will be a long-term process.
Egypt’s annual inflation rate has been on a slowing streak for the last three months to reach 24 per cent in January compared to 29.8 per cent and 35.7 per cent in January and February 2024.
However, the decline has been mainly due to the base effect, which means that the comparison between the rate of increase in prices this month to that of the corresponding month a year ago gives a low reading because last year’s was high and not because prices are getting lower.
Mohamed Hassan, managing director of Alpha Financial Investment Management, said that while the new package represents an effort to enhance household incomes, it remains insufficient in the light of rising inflation and surging prices.
He said the raises would offer temporary relief, but more packages are needed.
The most recent increase in the minimum wage for public sector employees occurred in early 2023, when it rose by 50 per cent to LE6,000 as part of a broader LE180 billion social protection package.
Last month, the National Council for Wages decided to increase the minimum wage for private sector workers from LE6,000 to LE7,000 starting in March.
The first package was introduced in 2020 costing the state LE100 billion and meant to support economic sectors affected by the Covid-19 pandemic. The second package was announced in April 2022 and was valued at LE78 billion. It aimed to mitigate the economic fallout of the Russia-Ukraine war.
In September 2022, the third package, amounting to LE67.5 billion, was launched to support vulnerable groups facing mounting economic hardships.
April 2023 saw the introduction of the fourth package, worth LE150 billion, which was meant to address escalating living costs. The fifth package, in October 2023 and totalling LE60 billion, sought to counter successive waves of inflation.
In March 2024, the sixth and largest package to date was launched, with LE180 billion in allocations. This was intended to support people struggling with additional economic pressures.
* A version of this article appears in print in the 6 March, 2025 edition of Al-Ahram Weekly
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