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Thursday, 18 July 2019

Egypt’s exporters have four new ways to claim their overdue payments

Exporters now have four new ways through which to claim their overdue payments from the Export Subsidy Fund, according to a letter from the Trade Ministry seen by the press. Under the new framework, exporters could receive discounts on their obligations to the electricity, oil, and investment ministries and claim redeemable IOUs from the Finance Ministry. They will also be given the option of receiving bank loans with interest paid for by the ministry, or acquiring land designated for agriculture or administrative use and/or industrial or commercial development. These payout options are new alternatives offered alongside tax breaks, which the exporters are waiting to receive more clarity as part of a new framework that could see the government make good on overdue export subsidy payments.

Background: Making good on the overdue payments will come as part of a larger export subsidies framework that will see the government set aside EGP 6 bn annually in its budget. We were expecting more details as the fund’s board of directors met at the start of this week. Egyptian exporters claim they are owed up to EGP 12 bn since last year under a promise from the fund to pay out cash-based export subsidies. After repeated attempts by the exports council to reclaim the arrears, the fund’s board agreed to a new strategy which feature tax breaks as a way to reimburse the exporters. The finance and trade ministries then held meetings to discuss netting overdue subsidies off against the exporters due taxes.

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