Archive for Finance Minister Momtaz al-Saeed

State budget suffers incurable disease, says finance minister

by admin
December 31st, 2012

 

The state budget suffers from an incurable disease, with resources only covering 60 percent of public expenditures, state-owned Nile News quoted Finance Minister Momtaz al-Saeed as saying Sunday.

Government wages account for 25 percent of the budget, debt interests 25 percent, subsidies 27 percent and public investment 11 percent, he said during a press conference at the General Federation of Chambers of Commerce.

Egypt needs US$14.5 billion to offset its budget deficit and the public debt, he said. Foreign reserves  dropped from US$25 billion to US$15 billion in November due to the country's instability and the economy sustained an opportunity loss of US$20 billion due to investment concerns and declining domestic and foreign tourism, according to the minister.

He cited potential solutions of cutting expenditures by reducing wages or introducing a progressive tax system, which he said may not be appropriate at this time.  Borrowing and rationalizing subsidies, especially the 40 percent of subsidies he estimated go to those who don't need them, could also help ease the fiscal crisis without hurting the poor, he said.

Domestic and foreign debts amount to LE1.5 trillion, a burden he said would fall to future generations.

With negotiations to close a $4.8 billion International Monetary Fund expected to resume in January, Saeed say closing the deal would prove that the local economy is able to attract investment.

Prime Minister Hesham Qandil also said Sunday that the budget deficit is one of the biggest challenges facing the government, describing the economic situation as "critical," but also saying the country is not on the verge of bankruptcy.  

 

He said that the Cabinet would quickly take measures to address high unemployment and the gaping budget deficit, and promised to provide new job opportunities and improve the investment climate.

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FJP nominates three ministers for new Cabinet, source says

by admin
December 30th, 2012

 

Less than a week after touting the independence of the Cabinet and state institutions, the Freedom and Justice Party is jockeying for places in an impending Cabinet reshuffle. 
 
The party had initially nominated eight ministers, but eventually settled for three: Bassem Ouda, chairman of the party’s committee on energy, for the post of petroleum minister, Abdallah Shehata, chairman of the economic committee, for finance minister and Reda Agag, the president’s adviser for commodity supply, for minister of supply and social affairs, according to an anonymous party source.
 
The same FJP source expected the reshuffle to be announced within hours, and also said non-party member Hafez Salmawy, the director of the Electric Utility Regulatory and Consumer Protection Authority, would be tapped for minister of electricity.
 
Party leader Ahmed Ibrahim said the FJP seeks to put its members atop the ministries of local development, economic development, supply, and petroleum.
 
“Finance Minister Momtaz al-Saeed wants to quit for health reasons,” Ibrahim said, although Saeed has denied this on several occasions.
 
Amid much speculation on the reshuffle, Prime Minister Hesham Qandil said Sunday he was coordinating with President Mohamed Morsy to form a new Cabinet. He did not say whether that would include his own replacement, although anonymous FJP sources also said Sunday party has nominated Muslim Brotherhood Deputy Supreme Guide Khairat al-Shater for prime minister and is considering FJP President Saad al-Katatny as a backup. 
 

Just last week the party's media adviser Murad Ali denied reports the party was holding internal talks ove a reshuffle. The party does not interfere with Cabinet business and believes states bodies should be independent, he said.

Edited translation from Al-Masry Al-Youm

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Categories Egypt, Egypt Top Stories
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Finance Ministry: tax changes in January 2013

by admin
December 29th, 2012

Finance Minister Momtaz al-Saeed said changes to taxation, including the increased taxes on some goods, will be applied in January, following the end of a period of community dialogue.

Saeed told Al-Masry Al-Youm that these changes will not harm the poor and those of middle-income. He said that these changes will held plug Egypt’s funding gap worth US$ 14.5 billion because they will lead to reduced tax evasion, simplified procedures, improved business and investment climate.

Within the tax and accounting community, uncertainty remained after these tax changes had been announced and put on hold on the same evening earlier this month.

The amendments include income, sales, duty and real estate tax. The Income Tax Department said that it remained concerned that the recent decisions were neither being applied or clearly cancelled.

A senior official at the department said that tax increases apply to only 30 commodities, including steel and cement, and stressed that these decisions are sensitive and should have been applied immediately following their announcement and publishing in the Official Gazette.

The official, who requested anonymity, added that traders have made a profit and called for firm and clear decisions regarding taxes. He said that the fact that the decision to postpone the application of these taxes was made verbally by the president further contributed to misunderstanding between the tax department and the market.

Edited translation from Al-Masry Al-Youm

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Egypt requests delay of IMF loan approval

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December 11th, 2012

Prime Minister Hesham Qandil confirmed that Egypt has requested from the International Monetary Fund a one-month delay in approval of the US$4.8 billion loan.

Eariler in the day, Finance Minister Momtaz al-Saeed had told the Anadolu news agency that the IMF and the Cabinet are postponing their agreement. Final approval on the loan was originally slated for 19 December.

Qandil said Egypt's economic situation "had changed," and called for a national dialogue on the economic program drawn up in late November.

Saeed said that although "the fund did not set an exact date," the session is expected to be held in January.

Saeed said that the agreement was postponed until the economic program that the loan is contingent on could be ironed out. The recent tax amendments, which were implemented and quickly suspended by President Mohamed Morsy pending a public dialogue, were seen as forming part of this program.

Morsy’s tax decree proposed a tax increase on 50 different commodities, including steel, cigarettes, advertisements and soft drinks. The proposal, widely panned by the media, increased taxes anywhere between 2.5 and 200 percent.

Suffering a preliminary budget deficit of $27.5 billion for the year 2012-2013, Egypt has sought a total of $14.5 billion from financial institutions including the IMF, to support the budget and finance a 22-month reform program.

Saeed stressed that those on low-incomes were not targeted by the recent tax decisions and that the government seeks to avoid an economic crisis.

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Govt prepares law on Islam-friendly bonds

by admin
December 3rd, 2012

The Egyptian Financial Supervisory Authority has said it is drafting a new law that would allow the use of sukuk, or Islamic bonds, in financing private-sector activities.

The Finance Ministry is preparing a similar law for public-sector finance, the authority said.

The authority, which supervises the non-banking sector, said the new draft includes 30 articles regulating the issuance and trading of sukuk, and expanding the scope of activities that can be financed by Islamic bonds.

Finance Minister Momtaz al-Saeed said last month that the government was preparing a law that would permit the adoption of Islamic bonds.

Since President Mohamed Morsy, an Islamist, assumed office in June, predictions have been on the rise about the government’s intention to introduce Islam-friendly financing instruments.

The president currently has unchallengeable legislative powers as per a constitutional declaration he issued on 22 November. The capital market law, issued in 1992, allows the use of sukuk, and the financial authority says the draft law would expand their use.

According to the authority, the new law allows the bonds’ subscribers to act as asset shareholders rather than creditors. It also requires that the bonds conform with Sharia.

In September, the financial authority’s Islamic financing department said the volume of Islamic banking in Egypt stood at LE95 billion by the end of May, accounting for 7.3 percent of the local banking market.

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Egypt government offers Turkey new investment opportunities

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November 18th, 2012

The Egyptian government trumpeted new investment opportunities in housing at an Egyptian-Turkish business forum attended by the prime ministers of both countries on Sunday, according to Egyptian state television.

Investment Minister Osama Saleh said the government had taken steps to remove bureaucratic obstacles and create a healthy atmosphere for investment. “We amended the investment act to allow adjustments of old contracts, so that they are not affected by changes that took place since the revolution,” he said. “And we are reconciling with the businessmen who were prosecuted.”

Saleh praised what he called booming Egyptian-Turkish relations, with a trade volume of US$5 billion, and Turkish investments with a market value of $1.5 billion. Of the 441 Turkish companies operating in Egypt, 83 percent are in the industrial sector, he added.

Housing Minister and Urban Development Minister Tareq Wafiq said there are opportunities available to investors in industry, agriculture and housing. He said the government is finalizing a comprehensive development plan, to be completed in 2052, that would expand the amount of livable land in the country. Currently the entire population lives on about 6 percent of Egypt’s total land area, most of which is in Cairo and the Delta.

He also called on Turkish investors to invest in Egyptian transportation, and also provide expertise in building new tramways in New Cairo and 6th of October City. Wafiq also called on Turkish businessmen to invest in projects for low-income Egyptians, which he said cost little and generate quick profits.

“The Suez Canal Zone development project is expected to turn that region into the economic capital of Egypt and an international transport hub,” Wafiq said. “The logistic and marine services will achieve returns of up to US$100 billion a year, 20 times greater than the [current] canal fees.”

Last month, Finance Minister Momtaz al-Saeed said Egypt and Turkey had agreed on a $1 billion Turkish loan as part of a $2 billion aid package to support the troubled Egyptian economy.

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Egyptian intelligence chief visits Turkey to discuss Syria

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November 11th, 2012

The director of Egyptian intelligence, Mohamed Raafat Shehata, has embarked on a two-day visit to Turkey to discuss the latest developments in the region, in particular the Syrian crisis, according to DPA.

Shehata, along with his delegation, will discuss ways of strengthening cooperation between Egypt and Turkey, especially on security issues.

Turkish Prime Minister Recep Tayyip Erdogan is due in Egypt on 17 November for talks on boosting ties, Foreign Ministry spokesperson Amr Roshdy said on Saturday.

He said details of the trip were agreed on during talks in Ankara on Friday between Foreign Minister Mohamed Kamel Amr and his Turkish counterpart, Ahmet Davutoglu.

Erdogan is to be accompanied by a delegation of 12 ministers, “the largest in the history of diplomatic relations between the two countries.”

Last month, Finance Minister Momtaz al-Saeed said the two countries had reached agreement on a Turkish loan of US$1 billion as part of an aid package of $2 billion to support the troubled Egyptian economy.

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FJP leader accuses Cabinet of undermining Morsy

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November 11th, 2012

A prominent Freedom and Justice Party MP in the Shura Council on Sunday accused Prime Minister Hesham Qandil’s Cabinet of thwarting the efforts of President Mohamed Morsy, with the goal of making Morsy lose the confidence of the Egyptian people.

“Like [former Prime Minister] Kamal al-Ganzouri’s Cabinet, this Cabinet is trying to spoil the work of the people’s representatives in Parliament,” said Al-Sayed Hozayen, head of the Shura Council’s agricultural committee, on the Sawt al-Shaab TV channel, which airs parliamentary sessions.

“It has made the [Egyptian] people lose confidence in their representatives and their president,” he said.

“Proof [of this] is that government officials have refused to carry out the president’s decree to buy tons of rice from farmers for LE2,000 [each],” he added.

Hozayen also gave the example of a police officer telling him he thought President Morsy was “on open vacation.”

Finance Minister Momtaz al-Saeed denounced such accusations against the Cabinet.

“The government is doing its best,” he contended.

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Egypt expects IMF decision within 10 days from talks

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November 5th, 2012

The International Monetary Fund will make its final decision on Egypt's request for a US$4.2 million loan within 10 days after the organization’s delegation concludes talks with the government, Finance Minister Momtaz al-Saeed said on Monday.

Saeed described the current negotiations between the government and the IMF delegation as “going well.” He expected that the IMF’s executive board won’t make a decision during the delegation’s visit to Cairo.

The delegation would discuss the results of the Cairo negotiations with the executive board, focusing on the government's plan for economic and social reform to pull the country out of the financial crisis, Saeed said.  

The minister anticipated that the IMF would approve the loan and deliver it to the government in two stages.

Egypt began negotiations with the IMF on last Tuesday. The talks in Cairo aim to reach an agreement before the end of this year.

Egypt formally requested the IMF loan in August to help it plug budget and balance of payments deficits worsened by the popular uprising last year that ousted President Hosni Mubarak. It is expected that the agreement would enable Egypt to access funding from other international lenders, such as the African Development Bank and the World Bank.

Analysts say that Egypt urgently needs financial support to prop up state coffers weakened by economic turmoil since the revolution.

Many foreign investors are waiting for an IMF agreement before venturing back to Egypt. The IMF wants Egypt to narrow a budget deficit that has grown to 11 percent of gross domestic product, and measures to reduce costly state fuel subsidies would be key to any deal.

Edited translation from Al-Masry Al-Youm

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Minister: IMF delegation to visit Egypt late October

by admin
October 16th, 2012

 

A delegation from the International Monetary Fund will visit Egypt late this month to resume discussions over a US$4.8 billionloan Egypt had requested to shore up its economy and bridge its budget deficit, the Ministry of Finance said Tuesday.

The Egyptian government made the request for the loan last August. The amount had been previously set at US$3.2 billion before Egypt asked for an increase. The 2012-2013 budget deficit is expected to increase to LE170 billion, up from LE130 billion as estimated in the budget.

The IMF had paused negotiations with Egypt, which had started last year, in order to wait for country to achieve political stability and lay down an economic plan.

Finance Minister Momtaz al-Saeed said in a press statement that the delegation will discuss with the government the latter's economic plans before approving a deal.

Saeed said the Deauville Partnership, an initiative comprising G8 countries to assist Middle East and North African countries in their democratic transition, has launched a $250 million MENA Transitional Fund.

The minister added that Egypt expects direct support from the general budget in the form of soft loans, foreign currency deposits at the Central Bank of Egypt and the purchase of government treasury notes.

Egyptian officials had participated in a joint meeting in Tokyo days ago by the IMF and the World Bank. A meeting by finance ministers from the Deauville Partnership was held on the sidelines.

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