The government approved, during a parliament session on Sunday, the allocation of EGP 60bn to increase the pensions and basic salaries of state employees attended by Minister of Finance Amr El-Garhy.
Prime Minister Sherif Ismail said that this came based on directives from President Abdel Fattah Al-Sisi to improve the conditions of and lessen burdens on low-income citizens. The EGP 60bn will be allocated from the state treasury.
The government further approved the request of Parliament Speaker Ali Abdel Aal to allocate an additional EGP 4bn to increase the salaries of state employees.
Abdel Aal told El-Garhy that the 15% increase approved by the government in that respect, in the new 2018/19 budget, is not enough.
The salary raises are expected to be added to extraordinary bonuses for the fiscal year (FY) 2018/2019, as the allowance is an integral part of the basic remuneration of each employee.
The extra allowances will be provided to both employees addressed under the Civil Service Law and those not covered by the law to the law, according to law.
Since the pound’s flotation, the government made several decisions to ensure social protection for low-income citizen and people most in need, to able to cope with the challenges of the economic reform programme.
The allowances will be adopted on 1 July 2018. The pre-determined bonuses will be according to different income levels, with employees receiving a monthly allowance of EGP 140, EGP 150, or EGP 160 depending on their income.
This is not the first decision of its kind, as regularly, ahead of any expected price hikes, the Egyptian government provides allowances to governmental employees.
The decision comes a few weeks before energy subsides are expected to be further cut, including on petroleum products and electricity. The Egyptian government is anticipated to slash petroleum subsidies by about 26%, and electricity subsidies by 47% in the draft budget for FY 2018/19, local media reported.
Since the pound’s flotation in November 2016, Egypt has cut energy subsidies twice, raising petrol and diesel prices by around 40-50% and doubling the cost of butane cooking gas. Subsidies were cut three times since President Abdel Fattah Al-Sisi took office in mid-2014.
Despite the subsidy cuts, the new budget targets increasing public salary spending to EGP 266bn, up from EGP 240bn in the current budget, and spending on social welfare to EGP 332bn, according to an April cabinet statement.