Egypt to issue $3-4B eurobonds in Q1 of 2018: Garhy

CAIRO – 18 September 2017: Egypt's fiscal gap is estimated at $10-12 billion in the fiscal year (FY) 2017/2018, Minister of Finance Amr El-Garhy announced Monday at the Euromoney Egypt Conference.

At the two-day Conference which kicked off in Cairo Monday, the minister added that the government is planning to issue eurobonds at a total value of $3-4 billion in the first quarter of 2018.

Garhy added that since September last year a lot of reforms were applied such as the Value-Added Tax (VAT) Law, the International Monetary Fund (IMF) deal, Civil Service Law and most importantly the Egyptian pound's flotation.

A year ago, the entire foreign exchange regime was being dealt with outside the banking sector, but now there is no mention for currency-parallel market after flotation, Garhy added.

"Currency situation should reflect the reality of the economy, not only economically but politically as well," the minister said.

Talking about the subsidies system, Garhy highlighted that the government is very resilient about reforming it because it is currently "unfair."

The finance minister noted that parts of the energy subsidies were moved to food subsidies and cash programs such as Takaful and Karama, in order to restructure the subsidies system.

Comparing between the previous and the current regimes, Garhy said that "the current president and regime are taking unpopulous decisions and not comprising, to put things on the right track."

Further, the minister highlighted that the ministry is working on increasing revenues, through the application of the VAT, the devaluation of the pound and picking out certain taxation items, which was reflected in improving tax percentage per GDP.

"We still have weak points in the taxation system and we are fighting tax avoidance. We became addicted to debts after 2011," Garhy said.

One of the ministry's priorities is to have inflation controlled to stand at a reasonable level, Garhy said, affirming that "inflation is the number one enemy to the budget."

"Gross domestic product (GDP) growth rate is predicted to close at 5 percent and 5.25 percent by the end of FY 2017/18, after closing at 5 percent during the fourth quarter of the last fiscal year," the minister said.

Garhy expected a good level of foreign direct investments (FDI) to be seen in the coming period in Egypt.

The minister highlighted that the execution of the New Investment Law on the ground is more important.

"We witnessed mistakes between 2002 and 2010 as we had a lot of investment in high-energy consumption projects rather than labor-intensive projects," Garhy added.

The minister highlighted that the government is more than willing to eliminate restrictions for FDI in education and healthcare sectors and make the industrial base bigger.

Talking about the financial inclusion, Garhy said that there are efforts to make a larger number of people financially included.

Listing the progress that has happened so far, the minister said that the budget will be automated by fiscal year 2017/18, in addition, the wages and pension system is currently being operated by cards.

The policy's priorities in the coming period will include continuing in the trend of slashing the budget deficit, debt level and the primary deficit, Garhy concluded.