Deteriorating relations between IMF and the Egyptian government
The initial refusal of the IMF to negotiate with the transitional government following President Mohamed Morsi’s removal ignited a crisis that has since deepened. Although IMF head Christine Lagarde recently declared that the IMF is now inclined to negotiate with the government, Central Bank Governor Hesham Ramez denounced “ill-treatment” from the international institution last week. As a result, Prime Minister Hazem al-Beblawi recently decided to reduce diplomatic representation in the talks with the institution. An IMF delegation visited Cairo last week for the first time since June 30, but the purpose of the visit was to provide technical support for the implementation of the Value-Added Tax (VAT) instead of actual sales tax. No discussion was made on the loan. Finance Minister Ahmed Galal has asserted several times in recent months that Egypt does not need IMF financial support anymore.
More details released on the minimum wage
Negotiations on the minimum wage in the private sector are under way. Minister of Industry and External Trade Mounir Fakhry Abdel Nour told MENA on Thursday that some business sectors and geographic areas could be exempted from it. He said small and medium sized enterprises (SMEs), villages, tourism and textile sectors could be exempt. The National Council for Wages will take a final decision.
More details on the minimum wage in the public sector have been released. According to the Finance Ministry, around 4.8 million public employees will benefit from it. Public employees will receive a minimum of LE1,200 per month, from which will be deducted pensions, insurance and tax. In addition, 463,000 employees from the health sector will benefit from a raise, even though a minimum wage has not been set for the sector. The raise will be based on a complex system of bonuses.
Stock exchange still performing
After falling by 2.1 percent on Monday October 28 in the wake of events in Mansoura and the announcement of the trial of former president Morsi, the Egyptian stock exchange main index, EGX 30, has grown in the last four sessions, falling short of reaching a record high since the outbreak of the 2011 revolution, on October 22 of 6,201 points.
According to a Credit Suisse Bank report, there are 22,250 US dollar millionaires and 6 US dollar billionaires in Egypt. The six billionaires are all from the Sawiris and Mansour families. The wealth of these six people is worth 4.3 percent of Egypt’s wealth. Meanwhile, 90.4 percent of Egyptians own less than US$10,000. The report also said that Egypt’s share in global wealth went from 0.23 percent in 2000 to 0.16 percent in 2013.
Egypt has fallen one spot in the World Bank’s 2014 Doing Business report, going from 117th to 128th position. This yearly report assesses the business environment for SMEs in 189 countries. The organization slammed Egypt for raising corporate income tax while making no improvement on easing the business environment. Dealing with construction permits, investor protection and contract enforcement are the main obstacles to SMEs in Egypt — it is relatively easy to open a business and begin international trade.
The Central Bank decided to keep its main rates unchanged in a October 31 meeting.