Egypt has increased the monthly minimum wage by 50%, raising it to 6,000 pounds ($194). The adjustment effective from March is part of a 180 billion pound “urgent social protection package.”
- Tax threshold has been increased by 33%, from 45,000 pounds to 60,000 pounds, for all employees in the public and private sectors.
- The wages of state workers have been additionally increased by a minimum ranging from 1,000 to 1,200 pounds per month.
- The move aims to alleviate the cost-of-living challenges in the North African country, which is potentially gearing up for another significant currency devaluation.
Egyptian President Abdel Fattah al-Sisi directed the government to raise the tax threshold by 33%, from 45,000 pounds to 60,000 pounds, for all employees in the public and private sectors.
In January, the Egyptian government increased prices for various services such as electricity, metro tickets, and telecommunication services to manage a budget deficit.
As part of the social protection package, the wages of state workers have been additionally increased by a minimum ranging from 1,000 to 1,200 pounds per month, Reuters reported.
The move aims to alleviate the cost-of-living challenges in the North African country, which is potentially gearing up for another significant currency devaluation.
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 country’s fragile economy, already impacted by the Gaza crisis, experienced a decline in tourism and reduced shipping through the Suez Canal, a key contributor to foreign currency reserves.
Egypt has engaged in discussions with the IMF over the past two weeks to revive and extend the loan agreement initially signed in December 2022.
The International Monetary Fund (IMF) announced on Thursday that it had reached an agreement with Egypt on the essential policy elements of an economic reform program, indicating progress toward finalizing a deal to enhance a $3 billion loan.
The agreement includes commitments from Egypt to transition to a flexible exchange rate system, decrease the state’s involvement in the economy, and promote private sector growth.
Most economists expect Egypt to devalue the pound again in the first quarter of this year. Egyptian billionaire Naguib Sawiris criticised the delay in implementing the much-anticipated devaluation of the pound in the northern country.
Nevertheless, disbursements under the program are contingent on eight reviews, with the first and second reviews initially scheduled for the previous year but postponed due to the stable exchange rate.