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Walking the tightrope

Thu, June 07, 2018 09:10

By the Gazette Editorial Board

The Egyptians are aware that they have to put up with more tough measures under the government's economic reform plan which took shape in November 2016.

 

The government's aggressive yet inevitable intervention to save the country's fragile economy has had a direct impact on the people's standard of living.

 

With unprecedented measures such as floating the pound and cutting subsidies on fuel, the government had to take counter measures to protect the strata whose income would be adversely affected by the reform programme.

 

Great efforts were and still are being exerted to create an investment-friendly climate to attract foreign investments, and to implement structural and administrative reforms to create jobs and encourage small and medium-sized enterprises.

 

Moreover, a number of social protection programmes have been introduced to help those living on a limited income face the waves of price hikes. This has included monthly pensions under the Karama and Takaful social programmes as well as increasing the value of monthly supplies for ration card holders.

 

The toughest part of the programme might be over; however, the government is expected to make another subsidy cut on fuel very soon.

 

Ahead of this extra cut, which will surely lead to an increase in the price of major commodities, the government submitted a draft law to parliament, which was approved on Monday, stipulating giving civil servants two bonuses and increasing pensions by 15 per cent. The increments will be effective as of next month.

 

The parliament has also approved a draft law to increase the minimum income tax threshold for each individual to LE8000 annually. Several income brackets will benefit from the proposed amendments to Tax law No. 91 for 2005. But the question is: Do these measures correspond to the actual cost of living?

 

 The government has done well to submit the increments bill to parliament before and not after the new subsidy cut, in a move that shows keenness on containing the repercussions of the reform plan on the low and middle-income brackets.

 

These efforts should not be underestimated. Yet the government still has several complementary measures to take to avoid any pay rise or social aid being swallowed up by market prices. Citizens have been complaining that the social protection package offered does not balance the increasing cost of living. And merchants know how to take advantage of this, especially when a new cut in the fuel subsidy is expected any time now.

 

The markets need to be controlled in a better way to stop unjustified price rises.

The people are showing patience and understanding because they are looking forward to the day when they will harvest the fruit of reform.