Minister of Finance Amr El-Garhy announced the terms of the loan agreement with the International Monetary Fund (IMF), under which Egypt is set to obtain a $12bn loan over three years. In a press conference on Sunday, El-Garhy said that the most prominent terms of the economic reform programme are reducing the overall deficit, reaching a deficit of 10.1% in the current fiscal year and to decrease it to 8.5% in the coming fiscal year, and turning the initial deficit into a surplus this fiscal year. He added that the agreement includes reducing domestic public debt to 98% or 99% of the GDP instead of 100% now. Additionally, the programme also includes lifting fuel subsidies entirely in a period of 3-5 years. He pointed out that a new small enterprises tax law will be passed, whilst maintaining the value-added tax rate at 14% starting from the coming fiscal year. He noted that taxes are set to contribute 13.2% to the national GDP. Moreover, he said that the agreement aims to increase general revenues of the state by 0.5%, and improve return through the public companies IPO programme. The minister added that the reform programme will control the wages bill and increase spending on social protection programmes. Furthermore, he stressed that the agreement with the IMF includes improving the investment climate through passing the licences and bankruptcy laws. He added that the financial results of government bodies will be reviewed on a regular basis and design a plan to boost Egyptian exports. He continued saying that the US dollar price at customs will be fixed for importers throughout the month, starting from February, instead of changing the rate every day. He explained that the rate will change on a monthly basis, according to average rates of the month before. The rate has been changing every day after the flotation of the Egyptian pound on 3 November 2016, which was part of the agreed upon IMF loan terms. The US dollar rate for customs has been ranging near EGP 18.68 for buying and EGP 18.86 for selling last week. Furthermore, the minister said that the bylaws of the value-added tax will be issued within two weeks. He pointed out that the government targets reducing the public deficit in this year's budget to 10.1-10.2%. At the beginning of fiscal year 2016/2017, the government had expected the deficit to reach 9.8%. Budget deficit in the last fiscal year had registered 12.3%. El-Garhy said that the deficit fell to 5.1% in the first half of the current fiscal year, down from 6.2% in the corresponding period last year. The deficit amounted to EGP 174bn in the first half of the current fiscal year, accounting for 5.1% of the GDP, which was estimated at EGP 3.4tn, according to El-Garhy. He pointed out that revenues of the public budget have increased in the first half of the current fiscal year by 14.5%, compared to the same period in the fiscal year before, registering EGP 220bn. He added that expenses increased by 10% to reach EGP 385bn. The minister noted that Egypt is set to issue international bonds worth $2-2.5bn in a promotional tour beginning this week. He added that the tour will kick off on Monday in the United Arab Emirates, before moving to the United States and Britain to conclude on 24 or 25 January. He noted that the IMF loan comes with an interest of 1.5-1.75%, adding that each tranche is payable within 10 years.
