Egypt is planning to introduce sukuk and revisit the international capital market to help finance its $36bn financing gap during fiscal year (FY) 2015/2016, Minister of Finance Hany Kadry Dimian said.
In order to resolve Egypt’s public debt problem in five years, a $36bn financial gap needs to be overcome. In June, the Egyptian government sold 10-year international bonds worth $1.5bn, with revenue of 6%. Dimian added that the best bet to bridge the financing gap is to continue reforming the economy.
“We are very inspired with positive energy that we have cut through many milestones,” the minister said, adding that the parliamentary elections are the remaining milestone that will ease the government’s work.
“The Suez Canal Zone that was entirely a military zone now is opening to everyone,” Dimian added.
The oil sector is also opening up to new private investors, Dimian noted.
In a survey conducted by the Euromoney conference, 46% of respondents stated that they did not understand the opportunities offered as part of the Suez Canal Development project. The minister defended the project, saying that a top-notch master plan was prepared and interest in the project was shown.
When asked why the state budget deficit is going down “very slowly”, Dimian stated that looking at the figures, one will find the deficit dropped from 12.7% of GDP to 11.5% .
He said that this is the “face value of reform”, explaining that if grants received in FY 2013/2014 and FY 2014/2015 were taken out of the equation, one will find that the progress was about 4% of GDP. Dimian added that this is an “unprecedented success”.
The International Monetary Fund (IMF) will visit Egypt in early October. In an interview with Daily News Egypt, Dimian mentioned that the midterm deficit could be revised by the first quarter (Q1) of the next fiscal year. Discussing the fluctuations of the Egyptian pound, the minister said that “if we talk about currency, we need to talk about competitiveness”.
Having a fully fledged VAT system will increase competitiveness, Dimian added, highlighting that competitiveness will help stabilise the pound.
“Taxes paid on direct and indirect inputs will decrease and the double taxation system will be radiated,” the minister said. He added that the tax rate was reduced from 30% to 22.5%.