Support measures approved

Gamal Essam El-Din , Tuesday 13 Feb 2024

On Monday, the House of Representatives approved five bills earmarking LE180 billion to fund a new package of wage and pension hikes, tax breaks, and social protection programmes, reports Gamal Essam El-Din

Government employees are getting a 50 per cent increase in wages
Government employees are getting a 50 per cent increase in wages


A new package of social support measures, designed to mitigate the impact of the ongoing economic crisis on poorer households, will come into effect on 1 March. The package was announced on Wednesday 7 February following a meeting between President Abdel-Fattah Al-Sisi, Prime Minister Mustafa Madbouli and Finance Minister Mohamed Maait. 

The new measures include a 50 per cent hike in the monthly minimum wage of government employees to LE6,000, the third time the public sector minimum wage has been raised in a year. The minimum wage was last raised, from LE3,500 to LE4,000, in September 2023.

The package also includes an allocation of LE11 billion for the disbursement of periodic bonuses to employees covered by the Civil Service Law, LE6 billion to finance 120,000 new appointments of people in the medical, teaching, and administrative professions and LE15 billion for additional bonuses to be paid to doctors, nurses, and teaching staff. LE8.1 billion, LE1.6 billion and LE4.5 billion have also been allocated to cover wage increases for teachers, university staff members, and medical staff, respectively.

Egypt’s 13 million pensioners will receive a 15 per cent hike in their monthly pensions. The same increase will apply to beneficiaries of the Takaful and Karama social support programmes who receive monthly cash transfers. 

MPs also approved a 33 per cent increase in the income tax threshold, up from LE45,000 to LE60,000. The tax breaks will cost LE5 billion.

In a statement on 7 February, President Al-Sisi said that he directed the government to adopt urgent social support measures to alleviate the cost-of-living crisis.

Following Al-Sisi’s meeting with Madbouli and Maait, an informed source dismissed “rumours which claim the new round of social support measures will pave the way for a devaluation of the Egypt pound”. The rumours, said the sources, claimed the IMF had requested the measures to help people absorb the costs of a new reform programme based on further devaluation of the pound.

On 1 February, the Central Bank of Egypt (CBE) raised key interest rates by two per cent, a move which some Western media outlets and local analysts also saw as a precursor to devaluation.

House Speaker Hanafi Gebali said MPs had been keen to pass President Al-Sisi’s new social safety measures as early as possible. Some MPs, however, expressed reservations over the new package. Ihab Mansour, the spokesperson of the Egyptian Social Democratic Party, said “the new wave of social support measures will be useless unless the government exercises tight control over the local retail market to control prices and clamps down on merchants and traders who hoard goods.”

Mansour also voiced concerns that the financial stimulus package would be followed by a devaluation and subsidy cuts in line with IMF directives.

“This will affect living costs across the board and make life unbearable for the majority of citizens,” he said.

Last week, the IMF and Egypt agreed on key elements of the reform programme on which the release of further loan tranches is contingent.

In January, the government raised the prices of electricity, metro tickets and telecommunication services in an attempt to reduce the budget deficit.

MP Mustafa Bakri pointed out that the new package comes weeks ahead of Ramadan when demand on food products increases. “It is necessary that the government takes other measures to help reduce inflation. In the absence of such action the new package will have a limited impact. We’ve already seen the price of basic goods like sugar and rice constantly rising,” he said.

MPs affiliated with pro-government political parties warned that the financial incentives, bonuses, and tax cuts will evaporate as long as inflation continues to surge. 

“Government intervention is needed to stem inflation and keep prices in check, particularly ahead and during the month of Ramadan,” said MP Ahmed Bahaa Shalabi, parliamentary spokesperson of the Homat Watan Party.

* A version of this article appears in print in the 15 February, 2024 edition of Al-Ahram Weekly

Short link: