Egypt Bureaucrats Oppose Pay Cuts

Aug. 10 rally in Cairo attended by about 2,000 civil servants. The demonstration was the biggest outpouring of discontent with the government’s economic policies during El-Sisi’s 14 months in office.

In taking on the civil service, which eats up a quarter of state spending, El-Sisi is trying to get a bumpy economic recovery back on track. Success will help him rein in a budget deficit that has topped 10 percent of economic output since 2010. Failure risks alienating those who have stuck with him and further damaging investor confidence.

The outcome will be determined, in large part, by whether civil servants line up behind the plan.

“It’s a major gamble,” Yasser El-Shimy, a research fellow at Boston University, said in an e-mail. It may “substantially cut the base of popular support for the president,” he said.

The protest, and further action promised by a union of government employees, is the latest sign that El-Sisi’s promised fiscal overhaul is becoming harder to implement, even as he ramps up spending on megaprojects including a Suez Canal expansion. Since taking the unpopular step of slashing fuel subsidies, the government has backed down on a capital gains tax and a bigger levy on wealthy Egyptians.