Egyptian President Abdul Fattah El Sisi has announced an urgent EGP 180bn ($5.82bn) social stimulus package to be implemented starting in March. 

The announcement on Wednesday (February 7)came following a meeting between Sisi, PM Mostafa Madbouly, and Finance Minister Mohamed Maait. It clearly indicates that the $10bn-12bn loan agreement between the IMF and Egypt is about to conclude.

The IMF requested the Egyptian government implement a set of social protection measures to allow people to bear the economic implications of its reform programme. It is expected that the devaluation of the Egyptian pound and subsidy cuts will affect living costs across the board. 

On February 1, the Central Bank of Egypt (CBE) raised key interest rates by 200 basis points; a move seen by analysts as essential for securing the IMF loan and a prestep for another devaluation for the Egyptian pound.

The social stimulus package included raising the minimum wage by 50%, to reach EGP 6,000 ($194.2) per month and raising wages for public workers in the state and economic bodies by up to EGP 1,200 depending on job level.

The package also includes the allocation of EGP 11bn for the disbursement of a periodic bonus for those addressed by the Civil Service Law at a rate of 10% of the job wage, and 15% of the basic wage for other workers, with a minimum of EGP 150. An additional incentive will be disbursed starting EGP 500 for the sixth level, and increases by EGP 50 for each level, reaching EGP 900 for top level, at a cost of EGP 37.5bn. 

The package allocated EGP 6bn to appoint 120,000 people in medical, teaching and administrative professions. It approved EGP 15bn in additional financial needs for doctors, nurses, teachers, and university faculty members. It also allocated EGP 8.1bn, EGP 1.6bn and EGP 4.5bn to cover wage increases for teachers in pre-university education, faculty members, and medical staff respectively. 

Sisi also approved a 15% hike in pensions for EGP 13mn, at a total cost of EGP 74bn as well as a 15% increase in “Takaful and Karama” pensions at a cost of EGP 5.5bn. The package sets aside EGP 41bn for the Takaful and Karama pensions fund in FY 2024/25. 

Sisi also decided to raise the tax exemption limit for all state employees in the government, public and private sectors by 33% to EGP 60,000.

Egypt has been struggling to control the elevated prices of goods and services in the markets, reduce inflation, and achieve stability at the macroeconomic level.