Egypt’s total external debt rose by 40.8% year-on-year in the first half of the fiscal year 2016-2017, while domestic public debt increased by 28.9% in the same period, the Central Bank of Egypt announced.
In the February bulletin, the CBE said that the country’s total foreign debt increased to $67.3 billion in the first half of the fiscal year 2016-2017, ending in December 31, compared to $47.8 billion in the first half of 2015-2016, Albawaba reported.
Domestic public debt recorded LE3.252 trillion (around $166.9 billion) in 2016-2017, compared to LE2.368 trillion in the first half of the previous fiscal year.
The balance of foreign currency reserves recorded its highest level since March 2011, reaching about $28.5 billion, while the volume of cash inflows reached more than $17 billion since that date, CBE Governor Tarek Amer said in a meeting with Prime Minister Sherif Ismail.
The CBE announced the flotation of the Egyptian pound on November 3, 2016, leading to a significant increase in prices. The success of the flotation measures was reflected in the marked improvement in the stock market’s performance, which reached its highest level ever after a six-year lull—a clear indication of foreign investors’ increased confidence in the integrity of the banking reform program and in the ability of Egypt’s economy to achieve high and sustainable growth rates, Amer added in a statement.
These positive developments also led to improved performance in the balance of payments, as indicators show a recovery in the proceeds of non-oil commodity exports and an increase in the remittances of Egyptian expatriates, according to Amer.
Tax Breaks
An Egyptian official on Sunday said the country plans to offer tax cuts on certain industrial sectors, as an incentive to encourage investment in its struggling economy. Import-dependent Egypt has battled to attract hard currency and revive its economy since a 2011 popular uprising drove tourists and investors away.
Over the last three years President Abdel Fattah Al Sisi’s government has adopted an economic reform plan that included subsidy cuts and the floating of the Egyptian pound. Last year it secured approval for a $12 billion loan from the IMF.
“We have designed a temporary incentive program that attracts certain industries in certain areas,” Mohamed Khodeir, CEO of Egypt’s general authority for investment and free zones told Zawya in an interview.
As part of the new investment law, which is due to be approved by the Egyptian parliament in a few weeks, Khodeir said authorities are planning to include a new rule that could allow businessmen to redeem up to 40% of their business costs in the form of tax reductions.
The proposed new rule will apply to specific sectors being targeted by authorities, such as medium-cost education, electricity, food industries, pharmaceutical and manufacturing, Khodeir said.
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