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MPs yesterday approved the new round of wage and pension hikes designed to soften the impact of soaring inflation on low-income households. The measures — announced by President Abdel Fattah El Sisi earlier this month — will from 1 April raise salaries and the minimum wage for public-sector workers, hike pension payouts by 15%, and raise allocations to social protection programs.
The government is borrowing an extra EGP 165 bn to make it happen: The House yesterday voted through legislative amendments allowing the government to borrow an extra EGP 165 bn for the final quarter of the current fiscal year. Around EGP 70 bn will be used to increase funding to social protection programs while the wage hikes will cost EGP 10 bn.
More than half of it is being spent on debt servicing: Some EGP 85 bn of the new borrowing will be spent on servicing government debt in the April-June quarter. The government is facing sharply higher borrowing costs on the back of tightening global financial conditions and the war in Ukraine. The Central Bank of Egypt has raised interest rates by 800 bps over the past year in response to rising inflation and pressure on the EGP, while higher rates globally and the stronger USD has hiked the country’s external borrowing costs.
The measures have attracted criticism from pro-government and opposition MPs:Members of Mostaqbal Watan and opposition parties during a debate on Sunday criticized the measures for not going far enough to soften the impact of inflation, which accelerated to its highest level since July 2017 last month.
The criticism continued yesterday: Leftist MPs reiterated criticisms that the provisions fall flat in the face of soaring inflation, and called for a vote of no confidence in the government.
ALSO FROM THE HOUSE-
Temporary three-year licenses for informal industrial projects got the thumbs up: The House gave final approval to a bill that would give the Industrial Development Authority (IDA) the authority to provide informal industrial establishments with one-year licenses to operate while they work to legalize their businesses. The Trade Ministry will be able to extend these licenses by up to two more years upon the IDA’s recommendation.
As did tighter rules for village mayors and sheikhs: MPs also gave a final nod to a bill that would enable the regulatory committees that govern the disciplinary affairs of village mayors and sheikhs to convene more easily, Youm7reports.
