Egypt: Under “Social Package” President Raises 50% In Minimum Wages

A 180 billion pound “urgent social protection package” by Egyptian President Abdel Fattah al-Sisi includes a 50% increase in the minimum wage to 6,000 pounds ($194) per month, which will go into effect in March, according to a statement released by the presidency on Wednesday.

The action is being taken while Egypt is under observation for pound depreciation. A 200 basis point increase in interest rates by the central bank last week, according to some analysts, might portend an impending devaluation.

Earlier this month, the Egyptian pound, which has been fixed at 30.85 to the dollar since March, was trading at as low as 71 to the dollar on the black market; however, it has since strengthened to around 60.

According to the presidential statement, Sisi also gave the go-ahead for the government to increase the tax threshold for all employees in the public and private sectors by 33%, from 45,000 pounds to 60,000 pounds.

As part of the social package, state employees’ pay will also increase by a minimum of 1,000 to 1,200 pounds per month as of March.

In another indication that a final agreement to supplement a $3 billion loan is becoming close, the International Monetary Fund said on Thursday that it had reached an agreement with Egypt on the fundamental policy elements of an economic reform programme.

As part of the deal, Egypt promised to increase the private sector’s share of the economy and transition to a flexible exchange rate regime.

Disbursements under the project are contingent upon eight reviews, the first and second of which were slated for last year but were pushed back due to the stable exchange rate.

Ivanna Vladkova Hollar, the head of the IMF mission in Egypt, stated last Thursday that the two parties had made “excellent progress” in their discussions regarding a complete package of policies that are required to reach a Staff Level Agreement for the combined first and second assessments.