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Sunday, 18 November 2018

What’s happening with the promised release of export subsidy funds, ask Egypt’s exporters

What’s happening with the promised release of export subsidy payments, ask Egypt’s exporters: Egyptian exporters frustrated by what they feel is a lack of action from the government on releasing long-overdue export subsidies are urging Prime Minister Moustafa Madbouly to take action. Egypt’s export councils, along with the Egyptian Businessmen’s Association (EBA), sent letters (pdf) highlighting the struggles faced by exporters after a two-year delay in the release of export subsidy payments. They argue that the delay in payment is also making it difficult to plan after what they see as having fulfilled their end of the bargain as Egypt’s non-oil exports rose 7% in 9M2018.

What’s at stake? A separate letter (pdf) by the EBA last week suggests as much as EGP 9 bn in export subsidies have yet to be disbursed. But that figure could be as high as EGP 12 bn, according to Food Export Council member Karim Abou Ghaly. His Pasta Regina is alone owed around EGP 105 mn in export subsidies, with EGP 75 mn in export funds having been acknowledged by the government, he added.

How many companies are affected? Abu Ghaly tells us that as many as 400 food importers alone are suffering, saying the sector is owed about EGP 3 bn of the EGP 12 bn he believes the state owes exporters.

What’s an export subsidy, anyway? The state-run Export Subsidy Fund is supposed to pay out 8-12% of the value of exports to companies, depending on how much local content is used and the export destination.

Maait has promised a solution: The Madbouly Cabinet will meet this month to finalize a solution to pay out late subsidies to exporters, Finance Minister Mohamed Maait said last week, adding that his ministry will work with the Trade Ministry to set up a new framework to ensure payments are made on a regular basis. Separately, Youm7 quotes Maait as saying first payments could be made as early as this week. Maait delivered the same message in a recent meeting with the heads of Egypt’s export councils. Official figures suggest government has budgeted EGP 4 bn in export subsidies for FY2018-19.

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