CAIRO: Egyptian President Abdel Fattah El-Sisi has raised the monthly minimum wage by 50 percent to 6,000 Egyptian pounds ($194) to take effect in March, part of a 180 billion pound “urgent social protection package,” according to Reuters.
The move comes at a time when Egypt is on a pound devaluation watch. Some analysts said a 200 basis point interest rate hike by the central bank last week may indicate a devaluation is on the way.
The pound, fixed at 30.85 to the dollar since March, traded on the black market earlier this month as low as 71 to the dollar, but has strengthened since then to about 60.
El-Sisi also directed the government to raise the tax threshold by 33 percent, from 45,000 pounds to 60,000 pounds, for all employees in the public and private sectors, the presidency statement said.
The social package included an added increase in the wages of state workers by a minimum ranging from 1,000 to 1,200 pounds per month, as of March.
The International Monetary Fund said on Thursday it had agreed with Egypt on the key policy components of an economic reform program, in a further sign that a final deal to augment a $3 billion loan is nearing completion.
Egypt has been suffering from a slow-burning economic crisis and chronic shortage of foreign currency and has been in talks with the IMF for the last two weeks to revive and expand the loan agreement signed in December 2022.
The agreement included pledges that Egypt would move to a flexible exchange rate regime and reduce the state’s footprint in the economy while boosting the private sector.
However, disbursements under the program are subject to eight reviews, the first and second of which were scheduled last year but postponed as the exchange rate has remained steady.
The IMF mission chief for Egypt, Ivanna Vladkova Hollar, said last Thursday that the two sides made “excellent progress” in discussions of a comprehensive policy package needed to reach a Staff Level Agreement for the combined first and second reviews.
The Egyptian government in January raised prices of several services including electricity, metro tickets and telecommunication services as it tries to contain a budget deficit.
Egypt’s already weak economy has suffered from the Gaza crisis, which dampened tourism and decreased shipping through the Suez Canal, a major source of foreign currency.
The country’s net foreign reserves saw a only slight rise to $35.25 billion in January from $35.22 billion in December, the central bank said on Monday, while annual headline inflation slid to 33.7 percent in December from 34.6 percent in November and a historic high of 38 percent in September, according to the state statistics agency CAPMAS.
