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Sunday, 2 July 2017

What we’re tracking on 02 July 2017

** We apologize for being a few minutes late this morning, but there was rather a lot of news in the past week or so.

Welcome back, everybody, and welcome to the new fiscal year. We hope you enjoyed a relaxing Eid break, because the government certainly didn’t, having enacted a flurry of key and landmark decisions over the break. Lucky for you, dear readers, Enterprise is back on its regularly scheduled programing to bring you the rundown, with the key event being last Thursday’s fuel price hikes (more on this in Speed Round, below).

It’s FY2017-18 … but not officially: The House of Representatives passed the FY2017-18 budget, but a number of procedures must be completed before the government officially can begin implementing the budget — including increasing the value-added tax to 14% from 13%. The Council of State has yet to ratify the budget, which will then need to go back to the House for final sign-off. That’s expected to take place this Tuesday, according to Al Masry Al Youm. In the meantime, the Finance Ministry is reassuring the public that the 1 percentage point bump will have a limited impact on prices, with both Vice Minister of Finance Amr El Monayer and VAT Commissioner Abdel Moneim Matter noting that the cost of basic consumer goods including cooking oil and cigarettes will not rise.

The stamp tax on capital markets transactions is in effect. President Abdel Fattah El Sisi signed the measure into law. The 0.125% levy, which will rise to 0.175% in its third year, is expected to generate EGP 1-1.5 bn in FY 2017-18. El Sisi also signed into law amendments to the Income Tax Law which would delay the implementation of the capital gains tax until 2020. Both changes were published in the Official Gazette on Thursday, 22 June, according to Al Mal.

Also now official: El Sisi ratified the Tiran and Sanafir sovereignty handover agreement with Saudi Arabia over the Eid break, Sherif Ismail’s cabinet said in a statement picked up by Reuters. The president also sanctioned Egypt’s formal membership in the World Trade Organization’s Trade Facilitation Agreement, which simplifies export and import processes between signatory countries and ordered the nationwide state of emergency be extended another three months.

Egypt should receive the second USD 1.25 bn tranche of its USD 12 bn extended facility from the IMF in the first or second week of July, Finance Minister Amr El Garhy told Reuters. The disbursal was initially expected to come toward the end of June, but El Garhy said it was delayed due to bank procedures and the timing of IMF executive board meetings.

We’re also on the lookout for a USD 60 mn payment from the World Bank as part of its USD 400 mn funding for the Takaful and Karama social welfare programs, according to statements by Social Solidarity Minister Ghada Wali picked up by Al Shorouk. The World Bank had sent over a delegation during the Eid break to follow up on the programs.

Another plot twist in the special holiday episode of the Qatar mosalsal: Saudi Arabia, the UAE, Bahrain and Egypt issued on the eve of Eid a 13-point list of demands that Qatar must meet before ties can be normalized, Bloomberg reports. The demands include shutting down Al Jazeera and all its affiliated channels (including Al Jazeera English), curbing ties with Iran, shutting a Turkish military base, and paying reparations to the four states. Qatar has until today to accept the list of demands. Meanwhile, the chairman of the US Senate Foreign Relations Committee, Bob Corker, threatened to block arms sales to GCC countries if they do not resolve the spat with Qatar, according to the newswire.

President Abdel Fattah El Sisi is heading to Budapest today to participate in the Visegrád Summit taking place tomorrow. On the agenda: energy security and cooperation with the EU on both economic issues and counter-terrorism, according to an Ittihadiya statement.

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