Egypt's Trade and Industry Minister Amr Nassar (Photo: Al-Ahram)
The Export Development Fund (EDF) has announced the new terms and regulations for the provision of subsidies to the export sector, which has been suffering since the flotation of the Egyptian pound in 2016.
According to a statement issued by the EDF, which follows the Ministry of Trade and Industry, the new terms are meant to allocate EGP 6 bln per year in export subsidies through the fund starting from fiscal year 2019/20.
Based on the new terms, 40 percent of the total sum of the subsidies, EGP 2.4 bln, will be disbursed as a cash payment to exporters, while another 30 percent of the disbursement, EGP 1.8 bln, will be deducted from financial liabilities that exporters owed to the Ministry of Finance.
The remaining EGP 1.8 bln will be used to boost the infrastructure and capacities of export operations.
“The new terms are agreed upon by the government and the business community with the aim to increase Egypt’s volume of export to global markets. It also seeks to adopt an effective export program to benefit the national economy,” Minister of Trade and Industry Amr Nassar declared.
“The new terms will appropriate budgets for 13 exporting sectors, and will be reconsidered every six months,” Minister Nassar added.
He noted that exports that are not under covered under the umbrella of the new terms will benefit from the subsidies, explaining that EGP 40 mln will go to help increase Egypt’s exports to Africa; EGP 100 mln will be allocated to the national carrier EgyptAir in order to boost air shipping operations for Egyptian exports; and about EGP 100 mln will be allocated to the Export Development Authority (EDA) in order sustain the work of pooled fairs through a transitional phase until the end of 2019.
“The new terms are based off a number of measures, including increasing local manufacturing by a minimum of 40 percent."
The subsidies will also go to promote SMEs’ exports, at three percent of the total amount to be appropriated.
"The subsidies aims to increase Egyptian exports abroad by between 10-15 per cent. Tax-free zones exporters will get less than 50 per cent from what domestic exporters will receive,” Nassar clarified.