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Monday, 6 April 2020

Small companies can collect overdue export subsidies without proving they’re right with the Tax Authority

CABINET WATCH- Small companies can collect overdue export subsidies without proving they’re right with the Tax Authority: The Madbouly Cabinet will pay out export subsidy arrears to small companies owed less than EGP 5 mn without requiring official documents proving they have cleared their taxes, according to a cabinet statement. The government last month pledged to pay out EGP 1 bn in arrears by the end of April as part of its stimulus package to support the economy through covid-19, but had made the payouts contingent on tax clearance documentation.

Building materials companies want a slice of that pie: The Export Council for Building Materials is appealing to the Trade Ministry to make the same concession for building material firms, claiming that they are currently unable to get their hands on official documents because of the covid-19 outbreak, according to the local press.

Gov’t revises downward GDP growth expectations for current fiscal year (again): Based on its assessment of the economic impact of covid-19, the government has revised again its projections for Egypt’s GDP growth for FY2019-2020 to 4.2%, according to Planning Minister Hala El Said. This is the second revision in less than 10 days — the minister had cut the growth forecast for the fiscal year to 5.1%, from an original estimate of 5.6%, last month. El Said also now expects 3Q2019-2020 growth to come in at 4.5% (revised downward from 5.2%) and for the economy to expand only 1% during the current (fourth quarter) of the fiscal year (down from 4% previously). Egypt’s GDP grew 5.6% in 1H2019-2020, which was already slower than the 6% the government targeted in the state budget.

Speaking of the budget, the House Planning and Budgeting Committee has postponed its review of the FY2020-2021 draft budget over fears of spreading covid-19, committee deputy chair Yasser Omar tells Masrawy. The committee was scheduled to begin discussing the budget as of tomorrow, but has pushed it to a yet-to-be-determined later date. President Abdel Fattah El Sisi had reviewed the draft budget last month before it was shipped to the House.

What we know so far about next fiscal year’s budget: The government is ramping up spending on health, education, wages, and welfare. Revenues are expected to increase to EGP 1.3 tn, up almost EGP 200 bn from FY2019-2020, while the budget deficit should be shrinking to 6.3% of GDP compared to the 7.2% target in the current fiscal year’s budget. The government expects GDP to grow at a 3.3-3.5% clip next fiscal year, which Finance Minister Mohamed Maait had told us is based on its expectation that the covid-19 crisis will abate between July and December of this year.

The budget will also see the government spend EGP 5 bn on 13 new industrial zones in Assiut, Alexandria, Luxor, Beheira, Gharbia, Fayoum, and other governorates, according to a Planning Ministry statement. Another EGP 6.4 bn has been allocated to SME financing, as the government looks to fund 300k businesses in the upcoming fiscal year.

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