Gov’t tallying the cost of the float: It is too soon to tell what effect the float will have on the state budget, and the Finance Ministry is awaiting the FX market to stabilize before making that call, said Deputy Finance Minister Mohamed Moeit. Debt service on Egypt’s USD 53 bn tab will definitely rise, he added. Other Finance Ministry sources tell Al Shorouk that government expenditures are expected to rise by no less than 48% this fiscal year thanks to the float, not including the increase in the price of imports. Other sources expect the budget deficit to grow to 15% as a result of the rising cost of imports. Mitigating factors, Moeit is quoted as saying, will be new sources of USD revenue for the state and an influx of tax and customs revenues expected in the current fiscal year. Government sources tell AMAY that the VAT and the one-year tax disputes resolution mechanism should see the state’s receipts from taxes swell by EGP 38 bn this year. In parallel, rumors persist the government is looking at some form of progressive income tax.

Meanwhile, the EGPC has begun adjusting its budget for the next eight months of the fiscal year to account for the float. The Egyptian General Petroleum Corporation — think of it as the Oil Ministry’s commercial arm — is factoring in an exchange rate between EGP 13.00 and EGP 15.00. It is also planning on oil at USD 45 per barrel for the current fiscal year, up from an original forecast of USD 40 per. Media reports based on comments attributed to Tarek El Molla have suggested the impact of the float and higher oil prices will see the total fuel subsidy bill rise to EGP 64 bn, up 83% from the initial estimate of EGP 35 bn.

Electricity prices set in August will not change as a result of the rising costs of equipment, fuel and gas imports expected from the float, said Electricity Minister Mohamed Shaker on Sunday. The ministry will adopt a cost cutting strategy within its departments and subsidiaries to counter the effects, he added, according to the newspaper.

This comes as President Abdel Fattah El Sisi, CBE Governor Tarek Amer, Finance Minister Amr El Garhy and other senior cabinet ministers met on Sunday to follow up on the effects of devaluation and raising fuel prices, AMAY reports. The meeting also looked at implementing the 17 tax and other incentives adopted by the Supreme Investment Council last week.