File Photo: Egypt's President Abdel Fattah El-Sisi (Photo: Reuters)
Egypt is set to undertake several measures to “lift burdens off the average Egyptian citizen,” President Abdel-Fattah El-Sisi announced Tuesday evening.
In an iftar ceremony hosted by the Family House organisation, El-Sisi said he has decided on several procedures to be executed by the government aiming to ease austerity.
The decisions include a more than double increase of monthly subsidy cards, a rise from the already disbursed EGP 21 to EGP 50 per person, a 140 percent increase with EGP 85 billion allocated from the state’s budget instead of a prior EGP 45 billion.
El-Sisi did not disclose when the doubled food allowance on ration cards will go into effect. The country continues to witness strong inflation following the Central Bank of Egypt (CBE) November 2016 decision to float the Egyptian pound, which saw its value halved.
Egypt's annual headline inflation rate eased to 30.9 percent this May, down from 32.9 percent in April and up from 12.2 percent in May 2016.
Around 71 million people use the government's subsidy cards to buy essential food goods, which include sugar, rice and cooking oil.
El-Sisi also ordered an increase in financial support provided to the Takaful and Karama programme for around 1.75 million beneficiaries, with a rise worth EGP 8.25 billion, an increase from EGP 4 billion last year.
The Takaful and Karama programme, established by the government in early 2015, is a national social safety net programme aimed at protecting the poor through income support.
Last March, Egypt’s total subsidy bill, which includes Takaful and Karama as well as subsidies, in the coming fiscal year (2017/18) is estimated at EGP 385 billion, up from EGP 285 billion in the current fiscal year
In May, Egypt’s cabinet agreed to assign EGP 43 billion to the social security budget for the finanical year 2017-2018.
El-Sisi also ordered the increase of state pension payments with a percentage increase of 15 percent for 10 million pensioners, with a state budget of EGP 190 billion allotted instead of EGP 160 billion.
Ratification of a 10 percent raise in base salaries for public employees not covered by the country's civil service law is underway, as well as seven percent for those covered under the law.
El-Sisi’s approbation of the base salary increase for those covered by the law comes two days after parliament approved the raise.
El-Sisi also directed that more tax breaks are to be given to the low income brackets, only days after parliament agreed to raise the minimum income tax threshold to EGP 7,200 a year from EGP 6,500, as well as gave tax breaks to the first three income tax brackets.
He also suspended taxes on agricultural lands for three years.
The president’s orders come in line with earlier promises to ease austerity measures on low income citizens .
Egypt started a fiscal reform programme in July 2014 in an attempt to curb a growing state budget deficit by cutting subsidies and introducing new taxes, and liberalising the Egyptian pound in an attempt to secure a $12 billion three-year loan from the International Monetary Fund (IMF).
Shortly following the flotation of the Egyptian pound in November 2016, the IMF dispensed the first funding installment, $2.75 billion, of the loan.
Following a first review of the country’s reform programme last May, the IMF and Egypt reached a staff level agreement on the delivery of a $1.25 billion loan installment which would complete the first $4 billion tranche of the loan programme.
Egypt expects to receive the second $4 billion tranche in two instalments during the 2017-18 fiscal year, which begins in July, with the next review by the IMF expected in November or December.