The Ministry of Finance expects real wages in the public sector to grow by a record 10.6% in fiscal year 2026/27, driven by anticipated salary increases, most notably a rise in the minimum wage to 8,000 Egyptian pounds. The figures were disclosed in a statement presented by the finance minister to parliament yesterday and reviewed by Al Manassa.
The government’s projections, however, rest on inflation assumptions that are markedly below both the current upward trend and analysts’ forecasts. Officials expect inflation to fall to single digits, under 10%.
Real wages measure the purchasing power of salaries after adjusting for inflation.
The ministry acknowledged implicitly that real wages contracted over the three fiscal years from 2022/23 to 2025/26, as shown in its charts, a period marked by surging inflation.
A graph showing the Wage Growth vs. Inflation: Employee Compensation Trends as it appears in the reportPart of the projected wage growth stems from the 1,000 pounds increase in the minimum wage, bringing it to 8,000 pounds in the new fiscal year. But the forecast also relies on inflation expectations at their lowest in five years, despite the fallout from the war in Iran.
Macro analyst Israa Ahmed of brokerage firm Thndr and Walaa Ahmed, head of research at Prime Securities, both expect inflation to reach between 15–16% in the new fiscal year.
“The new budget was most likely built on the assumption that the Iranian war will not drag on,” Walaa Ahmed told Al Manassa.
Israa Ahmed said her forecast assumes the war’s repercussions will continue until July 2027, even if a ceasefire is reached soon. She noted that logistical disruptions in energy-exporting countries will keep fuel prices elevated for some time.
“The optimistic scenario is for average inflation in the new fiscal year to fall to 11%. But it is difficult to see single-digit figures except in some monthly readings, not the annual average,” she added.
The US–Israeli war on Iran has sharply driven up global energy prices, prompting the government to raise fuel prices by 30% in March and increase gas tariffs for fertilizer plants, triggering a surge in fertilizer costs.
The rapid exit of foreign portfolio funds from the local debt market, amid war-related risks, pushed the dollar to a record high above 54 pounds before it later eased following the announcement of a US–Iran truce.
