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Thursday, 9 March 2023

Cabinet signs off on new wage, pension hikes with higher price tag than originally projected

Cabinet approves package of wage + pension hikes, tax relief: Ministers yesterday approved the latest round of social support measures aimed at mitigating the impact of soaring inflation on the public. The program, announced last week by President Abdel Fattah El Sisi, will from April raise public-sector wages and pensions, and provide tax relief by raising the income tax exemption threshold.

The initial cost is looks higher than calculated: The new round of public-sector wage and pension hikes will end up costing the state an initial EGP 190 bn, EGP 40 bn for the remaining quarter of the current fiscal year and EGP 150 bn in FY 2023-2024, Prime Minister Moustafa Madbouly said during a presser (watch, runtime: 20:29). The Finance Ministry has initially calculated the cost to the public purse to be EGP 150 bn.

It’s all about inflation: Inflation hit a fresh five-year high of 25.8% in January as the impact of the ongoing depreciation of the EGP causes the cost of living to soar.

This comes on top of increased subsidies: Bread and food subsidies are costing the government an extra EGP 54 bn and it will pay out EGP 45 bn in fuel subsidies, Madbouly said.

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