Egypt seeks to diversify sources of funding, simplify bond, sukuk market

CAIRO – 19 October 2021: The Ministry of Finance is adopting a strategy based on diversifying sources of funding, expanding the investor base, increasing treasury bonds and bills issuance, and establishing new companies, according to the First Assistant Minister of Finance for Economic Affairs, Sherine El-Sharkawy.

The ministry has already started to take some actual measures that qualify it to implement the strategy that aims to revitalize the stock market, as it has established the Egyptian Company for Depository and Registry for Government Financial Instruments, and is working to end the establishment of the Islamic Sukuk Company before the end of the current fiscal year, she added.

“Volume of the sukuk market reaches $3.2 trillion, and it was necessary to enter this field,” El-Sharkawy said on the sidelines of the capital markets summit.

In her speech, she also touched on the situation of the capital market in Egypt, specifically the Egyptian Stock Exchange, and cited the large offering of the "e-finance" company, and said: "The stock exchange is one of the means of providing important financing for companies and attracting investment."

The ministry is currently implementing some legal provisions related to capital gains tax, although this tax is not the main reason behind the decline in the number of companies listed on the stock exchange, she noted.

The operations of delisting companies from the stock exchange came at a time when the tax did not exist in the first place, and it is an alternative to the stamp tax that the market has been dealing with for many years.

She said that the government seeks to achieve tax justice, especially since the capital gains tax contained in the law is 10 percent, which is higher than the rate imposed on individual investors and companies.