Finance Minister: Sisi’s new social support package to cost $2 bln annually

The new social support measures announced by President Abdel-Fattah El-Sisi will cost an estimated EGP 60 billion ($1.94 billion) annually, according to Minister of Finance Mohamed Maait.

The new package of raises in wages, grants, and bonuses will go into effect on 1 October, Maait added in a statement on Sunday 17/9/2023.

The minister stated that the increase in the monthly exceptional cost of living allowance will benefit 4.5 million state employees and cost EGP 16.4 billion annually.

Moreover, Maait announced that the exceptional grant for 11 million pensioners will add an EGP 32 billion annual cost that will be borne by insurance and pension funds.

The 15-percent-increase in Takaful and Karama benefits will add a burden of EGP 4.5 billion to the state treasury, he noted.

On Saturday, President El-Sisi announced a series of measures to alleviate the financial strains on citizens, including raising the minimum wage for public sector employees from EGP 3,500 to EGP 4,000.

He also raised the annual income tax exemption threshold by 25 percent to EGP 45,000.

Egyptians have been hit hard by a wave of inflation started on the heels of the Russian invasion of Ukraine in February 2022. The annual headline inflation peaked at 39.7 percent in August.

Inflation is projected to average 32.3 percent for 2023, a significant increase from the averages of 5.2 percent in 2021 and five percent in 2020.

Since February 2022, the Egyptian pound has lost nearly 50 percent of its value against the US dollar, tumbling from EGP 15.7 for each dollar to EGP 30.9.

To mitigate the burden on Egyptians, the government announced that the budget for subsidy and social protection networks would increase from EGP 358.4 billion in FY2022/2023 to EGP 529.7 billion (around $17.1 billion) in FY2023/2024, an increase of 48.8 percent.

Egyptians await another devaluation that is required by the International Monetary Fund (IMF) as their country is engaging in a four-year $3 billion loan agreement with the fund.

The shortage in US dollars aggravated the inflation crisis for a country whose trade deficit reached $23.6 billion between July 2022 and March 2023.

The government has recently launched various other initiatives to secure more foreign currency to bridge a financing gap estimated at $17 billion through 2026.

The country seeks to bring in $191 billion in annual revenues by 2026, up from the current figure of $70 billion.

Source: State Information Service Egypt