Gov’t could announce its biggest social support package to date in September

A new social support package in the works: The Madbouly government is gearing up to announce a new package of social protection measures in September, with plans to implement it starting October, two government sources told Enterprise.

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What to expect: The package will include wage and pension increases, alongside other forms of support for low-income households to mitigate the impact of inflationary pressures. This is part of a wider plan to restructure subsidies and increase electricity price hikes. Sources previously told us that the government decided to postpone any hikes to electricity prices until September.

Why now? The move could offset some of the impact of recent government price increases, including a 10-15% fuel-price hike at the end of July, an increase in Metro and train fare introduced last Thursday, and a 300% hike to subsidized bread prices at the end of May, which piled price pressure on some of Egypt’s most vulnerable.

Softening the blow: “We’re facing a significant increase in the cost of securing and providing strategic commodities,” one government source told Enterprise, adding that the government is “currently examining the feasibility of raising salaries to help cushion the inflationary effects on wages and pensions.”

This would be the second such package to come in 2024: The government delivered a package of public-sector wage hikes, income tax breaks, pension increases, and a 50% increase in the public-sector minimum wage, all as part of an EGP 180 bn package that came into effect in March.

…and could be the biggest social protection package to date: The package — which has not yet been finalized — could be the biggest such package to date, another government source told Enterprise.

A new task force: The government has put together a committee with representatives from the finance, supply, and social solidarity ministries that is working to ensure availability of strategic commodities, secure the financial needs for their import, and pricing them, among other decisions aimed at reducing inflation in the short term.

Remember: Annual headline inflation cooled for the fourth consecutive month in June, hitting a17-month low of 27.5% in urban areas, down from 28.1% in May.