CAIRO: Finance Minister Samir Radwan said Egypt has set a minimum wage of LE 700 for the next fiscal year, with LE 7.5 billion allocated to restructure wages. Egypt's economy will grow by 2.6 percent this fiscal year, which ends June 30, and 3.2 percent in fiscal year 2011/12, the minister said at a conference Wednesday. The budget expenditure was calculated at LE 514.5 billion with revenues of LE 350 billion, which will equal a deficit of 10.95 percent of GDP. The ratio between minimum and maximum wage was set at 1:36, Radwan said, adding that the plan is to reach a minimum wage of LE 1,200 within five years. "The whole argument was focused on minimum wage when what we actually have to do is restructure the entire wage system so that we can raise the minimum wage to LE 1,200 in five years," Radwan said. "We are targeting 1.9 million citizens with salaries of less than LE 700, because this is the real poverty line," he added. To help finance the increased spending, Reuters reported, Egypt will introduce a 10 percent tax on capital gains and a 5 percentage point increase in the income tax levied on finance firms and privately owned companies. Under a scaled taxation system, a 25 percent tax will be imposed on incomes of LE 10 million and above for individuals and companies, bringing in LE 1 billion for the state. At the same time, Egypt will exempt incomes of up to LE 12,000 a year from income tax, up from LE 9,000, Reuters reported. The tax on tobacco products will be raised by 10 percent, generating LE 1.2 billion in revenue for the state. Asked why the tax wasn't increased by a higher percentage, Radwan said “increasing the tax too quickly will encourage smuggling.” Egypt will increase subsidies on consumer goods by 26 percent to LE 22.4 billion and raise fuel subsidies to LE 99 billion — up from LE 31.3 billion, Reuters reported. A total of LE 3 billion will go toward a 15 percent raise for public sector employees and LE 1.5 billion for university professors' raises. There will also be a 102 percent increase in social insurance pensions. The budget allocates LE 10 billion for the National Housing Project to build one million apartments over the next five years, in addition to half a billion for scientific research and LE 3.2 billion for state-sponsored medical treatment. "There will not be any unemployment benefits, but rather a new program for graduates to be trained for six month or a year,” followed by job placement for those who excel, Radwan said. On a separate note, the minister said Banque Du Caire, while remaining a public bank, will now be an independent entity with a stronger management structure and a dedicated arm to support small and medium enterprises.
