Egypt to issue $3 bln Eurobond in Sept-Oct, implement VAT by Sept

Reuters , Tuesday 28 Jun 2016

Egypt's Ministry of Finance (File Photo)

Egypt's finance minister said on Monday the country would look to issue a $3 billion Eurobond between September and October, and would implement a long-delayed value-added tax (VAT) by September.

Egypt has searched for a variety of funding sources, from development loans to foreign grants and aid, to plug its financing needs as it contends with an acute dollar shortage that has hampered its ability to purchase from abroad.

It has delayed its return to the international bond market after selling its first Eurobond in five years in June of last year.

"We are studying a bond issuance of $3 billion on the international market between September and October of this year in order to fill part of the budget's financing gap, which is expected to reach $10 billion," Finance Minister Amr el-Garhy said.

Egypt has attributed the bond delay to turbulent financial markets and the slowdown in China, which has reduced liquidity for emerging markets.

Garhy also said he expected a value-added tax, that has been delayed on fears of inflation, to be applied in September "should parliament approve it".

"Once applied it is expected to bring in revenues during 2016-2017 (financial year) ranging from EGP20 (billion) to EGP25 billion ($2.25 billion-$2.82 billion)."

The law is expected to replace the current sales tax and broaden the tax base by subjecting all services to the tax while maintaining the principle of exempting basic goods and services that affect the poor. 

The parliament gave a preliminary approval to the state budget and sent it to the Council of State before it could be finally approved, reported official news agency MENA on Tuesday.

*This article has been edited by Ahram Online.

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