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Egypt’s cabinet approves end to tax exemptions for state entities but concerns remain

Published

1 year ago

June 21, 2023

Egypt’s cabinet has opted to stop tax exemptions for state entities as it approved a draft law to that effect on Wednesday.

According to a statement by the cabinet, “the approval is part of the Egyptian state’s desire to improve the investment climate and support private sector participation in various economic activities.”

The elimination of exemptions would be put into effect “without prejudice to… exemptions prescribed for works and duties relevant to the necessities of defending the state and protecting national security,” the statement said.

Egypt is trying to launch economic reforms to accommodate private sector participation. The law however appeared to retain at least some privileges enjoyed by the army despite concerns by the private sector that state-owned enterprises, including those owned by the army, use tax exemptions and other privileges to compete unfairly.

The military and other security organizations are free from income taxes under a 2005 law, from real estate taxes in a 2015 decree, from value-added taxes on goods and services needed for armament, defense, and national security under a 2016 law, and from import tariffs under a 1986 statute.

The International Financial Corporation (IFC), a department of the World Bank, promised last week to provide Egypt with economic consulting services. The IFC declared that it would give Egypt strategic guidance on its objectives to increase private sector participation in its economy.

The country’s economy has been in decline in recent years. It has devalued its currency by half since March 2022 after the fallout from Russia’s invasion of Ukraine exposed its economic vulnerabilities.

Related Topics:Egypt Featured Tax Exemption

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IMF mission concludes 4th loan program assessment in Egypt

Published

4 hours ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.