Minister of Finance Mohamed Maait - press photo
CAIRO - 19 July 2018: Egypt's Minister of Finance, Mohamed Maait, announced that the government will increase pensions by 15 percent starting July, raising the minimum pension from LE 500 to LE 750.
Earlier this month, the Parliament has approved a draft law to raise pensions by 15 percent and to amend the social insurance law promulgated by Law No. 79, 1975.
Article 1 of the draft law stipulated that the pensions will be increased by 15 percent starting July, while Article 2 reads that the minimum pension for the insured or eligible pension in accordance with the Law No. 79, 1975 shall be increased from LE 500 to LE 750, including all the increases and subsidies.
According to the draft law, the maximum pension shall be 80 percent of the settlement fee, which is the last remuneration of the speaker of the House of Representatives, prime minister and his deputies, ministries and their deputies, and governors or their last annual salary, and should not exceed the net maximum wage on the date of termination of office.
In this regard, Minister of Social Solidarity Ghada Wali stated on June 19 that the cost of increasing pensions by 15 percent is LE 21.3 billion ($1.1 billion) while the amount allocated to pensions in the new fiscal year’s budget is LE 150 billion.
Those decisions come in light of the government's efforts to make social security networks compatible with the impact of the Structural Adjustment Program (SAP) implemented by Egypt in exchange for loans from the Bretton Woods institutions, the World Bank and the International Monetary Fund (IMF).
On November 3, 2016, the Central Bank of Egypt (CBE) issued the decision to float the Egyptian currency, which incurred the rise in costs of raw material and imported goods, and thus the increase in prices.
Inflation rates rose from 20.7 percent in November 2016 to 30.5 percent in May 2017.
In August 2016, Parliament approved the Value Added Tax (VAT) law applied on goods and services. It started at a value of 13 percent last year to become 14 percent this year.
There are also plans to cancel subsidies on goods gradually, especially fuel, while shifting to monetary subsidies to achieve greater efficiency.
Monetary subsidies are delivered to beneficiaries of poor families enrolled on a recent program adopted by the Ministry of Cooperation called Takafol Wa karama (Solidarity and Dignity) launched two years ago.