On Wednesday, the presidency announced that Egyptian President Abdel Fattah al-Sisi will raise the monthly minimum wage by 50% to 6,000 pounds ($194) in March as part of a 180 billion pound “urgent social protection package”.
Egypt is on a pound devaluation watch. The central bank’s 200 basis point interest rate boost last week may signal a devaluation, economists suggested.
Since March, the Egyptian pound has been set at 30.85 to the dollar. This month, it went as low as 71 to the dollar on the black market before going back up to 60.
The presidency statement claimed Sisi ordered the government to raise the tax threshold for all public and private sector employees by 33%, from 45,000 pounds to 60,000 pounds.
As of March, the social package raised state worker wages by 1,000 to 1,200 pounds per month.
On Thursday, the International Monetary Fund said it had agreed with Egypt on the core policy components of an economic reform programme, indicating a final deal to boost a $3 billion loan is nearing completion.
Egypt has been in talks with the IMF for two weeks to revive and enhance the December 2022 loan arrangement due to a slow-burning economic crisis and foreign currency shortage.
Egypt pledged to adopt a flexible exchange rate policy, limit governmental involvement in the economy, and enhance the private sector.
Eight evaluations are required for programme disbursements, the first and second of which were scheduled last year but postponed due to the stable exchange rate.
Last Thursday, IMF mission leader for Egypt Ivanna Vladkova Hollar claimed the two parties made “excellent progress” in discussing a complete policy package needed to secure a Staff Level Agreement for the combined first and second reviews.
The Egyptian government boosted energy, metro, and telecommunication wage in January to reduce its budget deficit.
The Gaza crisis slowed tourism and Suez Canal commerce, hurting Egypt’s already fragile economy.
On Monday, the central bank reported that net foreign reserves rose to $35.25 billion in January from $35.22 billion in December, while annual headline inflation fell to 33.7% in December from 34.6% in November and a historic 38.0% in September, according to CAPMAS.
