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Sunday, 10 May 2020

Egypt has deployed just EGP 40 bn of funding from the EGP 100 bn stimulus and bailout funding, Maait says

The government has deployed just EGP 40 bn of the EGP 100 bn earmarked by the government to protect the economy against the covid-19 pandemic, Finance Minister Mohamed Maait said on Thursday, suggesting it has resources left to help cushion the blow to the economy. Some EGP 5.1 bn has been allocated to the Health Ministry, EGP 5 bn to the Supply Ministry to pay for strategic commodities, EGP 10 bn to the Export Subsidy Fund, and another EGP 10 bn that is being doled out soon to support tourism, aviation, and other vulnerable sectors.

Maait’s EGP 100 bn figure does not include funds earmarked by the Central Bank of Egypt to support the stock exchange through direct investment in equities.

Lower revenues, wider deficit: The crisis has weighed on state revenues during the second half of FY2019-2020, with tax revenues derived from tourism falling off a cliff due to the suspension of air travel. This has caused a EGP 75 bn shortfall in revenues since the beginning of the outbreak, EGP 65 bn of which came through lower-than-expected tax receipts, Maait said.

Background: Maait said last month that the government is effectively writing off the final quarter of the current fiscal year from a revenue perspective, but said that Egypt’s commitment to insulating the economy from the impact of covid-19 is nonetheless “open-ended.” The minister has previously signaled that the government could allocate more funding beyond the existing EGP 100 bn package. The stimulus also includes a tax relief package for businesses that allows companies in several sectors — including aviation, tourism, journalism and media, sports, and manufacturers — to pay income tax in three installments ending 30 June.

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