Reform policies has put the economy on right track, we endeavor to put Egypt in the economic status commensurates with its potentials
The Government’s economic policies enjoy confidence of the international community
The government is preparing to issue international bonds by the end of next month and investors welcome this step
The government recognizes Egypt’s Economic challenges and they shall be faced by strong support from political and popular will
The government implements a package of policies, programs, and projects to realize comprehensive development, in which all citizens will receive their advantages
Egypt has a fair tax system and encourages domestic and foreign investment
spending on education and health exceed allocations of fuel subsidy for the first time years ago
Minister of Finance, Mr. Hany Kadry Dimian, confirmed that Egypt’s economic policies are on the right track, as reflected by the economy performance indicators in the last period. This obviously appeared in economic performance evaluation reports issued by international institutions, especially credit rating agencies, in which the Egyptian economy evaluation degree was raised by all of them, and improving its outlook. Moreover, the International Monetary Fund (IMF) praised the government’s economic program, as well as its capability to achieve the government’s objectives in the medium term. This was asserted by the IMF’s Article IV consultations report issued last February, which demonstrate a confidence certificate in soundness of the economic policies.
The Minister also clarified during his participation in the International Monetary Fund and World Bank’s spring meetings that reform procedures implemented so far are considered a key step putting Egypt in its appropriate place on the international economic map. He asserted that the government intends to complete the financial and legislative reform program, which includes improvement of investment environment, prioritization of public spending to give way to increase spending for infrastructure and human development sectors, and enable to fulfill the constitutional entitlements for spending on education, health, and scientific research sectors. He also added that the government is working hard to optimize the return from additional spending dedicated to these services, so that every citizen already benefit from that spending. He explained, in this context that the state budget has witnessed, for the first time during the current fiscal year, the increase of allocations on both education and health sectors that exceed the allocations of energy and petroleum materials subsidy.
The Minister confirmed during his meetings with several investment banks and international institutions that the government is complementing the program of energy subsidy rationalization through many different mechanisms, and without depending totally on price reforms, of which application of smart card system, referring that the distribution of these cards will be completely finished soon, and it shall be used during the next few months. He pointed that all-this comes within a complete vision to reform energy sector in Egypt. The government already initiated during this year to develop and implement an integral plan to increase, diversify energy sources, largely encourage the participation of private sector in electricity field, through many procedures including issuance of new feed- in tariff law, and repayment of foreign partner’s arrears for the Egyptian General Authority for Petroleum, in order to encourage these companies on reinvest of this money for production in Egypt , as well as implementation of urgent electricity plan to build new six plants, to generate energy during the next few months.
On the other hand, the Minister mentioned that the government considers expanding its revenue base, including tax and non-tax revenues; whereas it seeks to apply VAT before the end of current fiscal year, also it takes into consideration improvement of the state’s assets management to reinforce the whole community’s benefit from such resources, and to provide sustainable income to Public Treasury on medium and long-term. He cleared that tax system in Egypt is equitable and competitive at the same time. Mentioning that standardization of tax rate at the ratio of 22.5% is within the long-term economic outlook which aims to maximize the state’s resources, especially through increasing tax resources from special –nature economic areas which are taxable at the ratio of 10%, it is expected that projects in such areas shall contribute with 1/3 of the national income on medium-term. During his meetings, the Minister confirmed that the government is committed to achieve the goals of its financial program, including reduction of budget deficit in the current fiscal year to reach 10.5% of GDP, so public debt in the three coming years shall range between 80-85% of GDP.
During his meetings with the investors, the Minister affirmed that Egypt intends to issue new international bonds and it is currently preparing to offer such bonds in the international markets at the end of next month. Also, current Sukuk Law is being reviewed; providing new financing instrument for the State Budget. Several investment banks participating in these meetings welcomed such step, in particular within the international community’s optimism regarding the future of the Egyptian economy performance especially after the success realized by Egypt Economic Development Conference- EEDC- held in Sharm El-Sheikh last month.
Within his participation in the Spring Meetings, the Minister met representatives of credit rating agencies which have a role on evaluating the Egyptian economy, this comes within the MOF’s trend to intensify the communications with such representatives to improve Egypt’s credit rating to reflect the real performance and the future expectations for the Egyptian economy.