No new taxes to be imposed in Egypt: Finance Minister

CAIRO – 26 September 2018: Minister of Finance Mohamed Ma’it said that no new taxes will be imposed, clarifying that the new stage aims to stabilize fiscal, customs and financial policies and focus on growth, employment and policies that support them.

The minister added that the government has no intention to increase taxes over the next four years.

This came during his meeting with members of the French Chamber of Commerce and Industry in Egypt, headed by Mahmoud al-Qaisi.

Ma’it affirmed that the economic reform program with its strong measures helped the Egyptian economy absorb all external blows.

Egypt embarked on a bold economic reform program that included the introduction of taxes, such as the value-added tax (VAT), and cutting energy subsidies, with the aim of trimming the budget deficit.

The country has floated its currency in November 2016 before it clinched a $12 billion loan from the International Monetary Fund (IMF).

The IMF Executive Board approved in November 2016 a three-year Extended Fund Facility (EFT) loan to Egypt worth $12 billion to support its economic reform program.

Regarding IMF, Ma'it said that in mid-October, the IMF mission will arrive to conduct a periodic review of the economic reform program, while the announcement of the outcome of the review will be announced in December.

He also added that a technical team from the IMF will arrive during the coming period to provide technical support for the formulation of an integrated tax strategy for Egypt until 2030 to achieve the goals of Egypt's strategy of sustainable development.

Egypt received the fourth tranche of the International Monetary Fund’s (IMF) loan; the total disbarments Egypt got under the program reached $8 billion.

This step came after the board's approval of the fourth tranche on Friday, June 29, as a result of the IMF delegation’s 16 day-visit that took place in May to review the state’s reform program.

Since 2016, the foreign reserves hiked to $44.4 billion from $13 billion, the minister said, noting that the deficit rate in 2013/2014 marked 16.7 percent and Arab countries grants contributed to decline this percentage to 13.7 percent.

He further said that Egypt succeeded in decreasing the deficit to 9.8 percent in June 2018, and now targets to hit 8.4 percent in 2018/2019.

"In 2018/2019, we aim to reduce the debt to GDP to 92 percent and we are working on a structural reform program for the Egyptian economy that aims at reducing the public debt to 70 percent within four years, inflation rates to 14 percent and unemployment to less than 10 percent,” he stated.

The minister added that the country is expected to achieve a growth rate of 5.8 percent in 2018/2019, after reaching 5.4 percent in the previous year, noting that Egypt has to record a growth rate of 7 to 8 percent in order to maintain its standard of living and achieve growth with an increasing population rate.

As per domestic debt instruments, Ma’it said that the state is facing challenges related to the hike of interest rate and that foreign investors are liquefying their assets and exiting the market either in the government financial instruments or the stock exchange.

He pointed out that the auctions of the domestic debt instrument will be cancelled as long as interest rates remain high, asserting that Egypt has other alternatives to manage liquidity and deal with all shocks.

He further noted that Egypt will begin to embark on tours in some Asian and European markets in preparation for the issuance of international bonds.

The minister added that the Ministry of Finance is currently implementing a plan to develop the tax system through a complete restructuring of the Egyptian Tax Authority so that the sectors of income and value added are integrated into one entity.

Furthermore, the ministry will issue a law to standardize all tax procedures, apply the electronic tax invoice, automate the Tax Authority procedures and electronically collect state receivables.

“The ministry is currently working on issuing an electronic bill in cooperation with two companies; the first is Japanese and the other is Chinese, which will implement the pilot phase of the electronic bill, set to facilitate all financial transactions of the business community," Ma'it concluded.