IMF asserted its wish to support Egypt Legislative reforms soon to boost investment atmosphere Finance Minister Ahmed Galal said the Egyptian government aims to boost investment atmosphere, ironing out obstacles facing investors, embarking on legislative reforms to reach targeted growth, which is 3.5 percent of gross domestic product (GDP), as well as social justice, which is the main objective of the interim government. Galal told Amwal Al-Ghad in an exclusive interview that LE60 billion has been added to the state budget from Arab aid, noting that the stimulus scheme reflects the government's plans for public investment expansion. Galal said the additional package totaling LE29.6 billion to revive the economy is allocated to pay arrears for contractors and suppliers, developing level crossings, supporting insolvent factories, public sector restructuring fund, low-cost housing, repairing streams and bridges, the national project of water and sewage, boosting power networks, infrastructure works at industrial cities, adding 800,000 units to the national natural gas network and bolstering overall development in Sinai. The minister said the package would not increase the country's budget deficit above the targeted 10 percent due to recent reforms by the government and the impact of Arab aid, which cut yields of treasury bills and bonds by 4 percent. Galal noted that the government would speed up to apply tax reforms, including value added tax system as it is fairer than the present sales tax. The minister said the "current slump does not allow to add more taxes", but this cannot prevent the government to "prepare a progressive tax scheme for the future", noting that studies show "the tax system is not the essential factor" for attracting investment as most investors in Egypt come from countries which signed double taxation avoidance agreements. He added that the government is concerned to engage the informal sector into the national economy as it accounts for 30 percent of the national income and employs around 40 percent of labour in Egypt. Galal said all funding tools are available whether treasury bills, bonds, sukuk or PPPs, and selecting the most appropriate means depends on the economic conditions. The minister unveiled negotiations with foreign oil companies were underway to reschedule arrears, provided that part of them will be paid by year-end. He said the government has provided LE18 billion annually needed to apply a minimum wage scheme (LE1,200 per month) for civil servants as of January. Galal added that the government had amended the property tax law, expanding exemptions to include residential and non-residential units. The minister noted that 50 percent of the levy, which is expected to total LE2.5-3 billion, will be allocated for developing shantytowns.
