• Outcomes of the new policies and reforms taken by the Government shall be reflected in the near future.
• Incentives package to attract workers of informal economy, of which tax holiday for not less than five years.
• A trend to unify the maximum wages across all Government Entities.
• Considering cash subsidy program for lower income families…Non-increase of sales tax on goods and services.
• Smart Cards distribution Oil Products Project, lowers subsidy costs by about 30 Billion Pounds.
• We wish to establish good relations with all countries in the world… We are not concerned that some countries shall prevent assisting Egypt.
• The changes witnessed by Egypt after the 30th of June revolution make us optimistic about the ability of our economy to overcome the challenges.
• End of last June, Egypt’s Economic situation was very critical.

Minister of Finance, Dr. Ahmed Galal, stressed that the Government shall pump within few weeks about 2.5 to 4 Billion pounds, as may be determined by committees of estimating arrears due to construction companies with Government Entities.
He said that such amounts shall contribute in activating construction sector dragging many other industries and crafts, which move national economy forward.

The Minister stressed that the current Government is keen to approach expansion policies, concentrating on investment promotion in order to activate economy, which previously experienced slowdown. Last fiscal year budget deficit recorded 14 % of GDP,public debt ratio reached about 92% of GDP and balance of payment deficit increasedto about $ 2 Billion, unemployment rate reached about 13 % , i.e. 3.6 Billion unemployed person, in addition to the increase of poverty rate from 20 % to 25 %.

The Minister noted that despite the said concerning indicators, the developments witnessed by Egypt after the 30th of June revolution make us optimistic about the ability of our national economy to overcome these negative indicators,  praising the grants and assistance package provided to Egypt by Gulf Countries, specially Saudi Arabia, the United Arab Emirates and Kuwait, amounting to $ 12 Billion , of which  $ 6 Billion as deposits in the Central Bank without interests, $ 3 Billion as non-refundable grants and $ 3 Billion in the form of Oil Products, providing oil products needed by the society, causing no problems, crises or pressure on the foreign exchange reserves.

He noted in press releases that the Government decided to use the deposits of $ 6 Billion to support foreign exchange reserves in the Central Bank and to use the grants value to increase public investment spending, giving the priority to the projects that are about to end, but they need funding, especially in infrastructure sector such as roads, water and electricity, which in turn shall stimulate private sector to pump more investments.

He emphasized that the outcomes of the policies approached by the Government shall be reflected in the near future. He revealed the preparation of the Cash Subsidy Program for the most needy families, where standards are being developed to benefit from the program, noting that the cash subsidy shall be given provided that the families’ sons should go to school and the provision of health care for the family.

The Minister announced that the Government considers the development of incentives and benefits package to encourageinformal economy workers voluntarily join the formal economy, throughgranting tax holiday for not less than five years in addition to helping them to simply issue industrial and commercial licenses and permits.

He noted that the system objectiveis to assist small enterprises to grow and get the needed funds to expand and develop.

The Minister indicated that such incentives are of great importance as the informal sector employs more than 40 % of Egyptian labor force, who work without contracts or work hours, in case of injuries they get neither indemnities nor health care, in case of retirement they get no pensions. In addition to the abovementioned, work conditions are extremely bad. Moreover, owners of small enterprises can’t access to loans or participate in Government tenders, therefore when they join the formal sector such bad conditionswill be changed.

Regarding the minimum wages, the Minister indicated that the Supreme Council for Wageshas recently held several meetings to determine the minimum wages to insure balance between two objectives, the first a decent standard of living, the second not to exaggerate the minimum wages value limiting new job creation, which causes harm to unemployed people.

The Minister noted that the Government considers the determination of a unified minimum wage, which will be applicable in all government sectors.

The current maximum wage law determined it at the ratio of 35 times of minimum wage in each entity, resulting in a discrepancy between the maximum wages applicable in various public entities. The Minister said that there are two critical issues at present, the first increasing sales tax general rate from 10 % to 12.5 %, imposing an escalating tax rate and the real estate tax that have specific features. The current real estate tax allocates only 50 % for public treasury, as for the remaining 50 % the law allocates 25 % for development of slums, the other 25 % for localities, which is of great importance to realize social justice, as we take money from rich people to develop slums.

Regarding the sales tax, the Minister affirmed that the Government shall not increase tax rates since they shall affect the poor sects, but it shall impose the value added tax, as it is fairer and the final consumer shall not incur tax value more than once.

As for claiming the imposition of escalating tax rates, the Minister said that in previous periods Egypt had industrial and commercial escalating tax rates.  Such tax rates, in terms of shape, are comfortable but tax evasion was too high, the Minister affirmed that he is with the escalating tax rates provided the consideration of the current economic situation, non-encouragement of tax evasion and the achievement of real return.

As for oil product distribution smart cards, the Minister indicated that the project will save yearly about 30 to 35 Billion pounds of energy subsidy through subsidy diversion or smuggling of petroleum products. The project insures the arrival of all provided quantities from oil depots to petrol stations and then to consumers in Egypt, he noted that the project does not include maximum limits, quotes consuming quantities or increasing petroleum product rates at the moment.

He said that Government has specified several phases to deal with initial energy subsidy, the smart cards project, which has already launched, second phase the deal with large energy consumers, such as intensive energy consumption factories, as we aim gradually to bridge the discrepancy between the current and the global rates.

Regarding social justice, the Minister said that the public debate stenographed the idea of social justice in the maximum and minimum wages, which is completely incorrect, as social justice shall be achieved through three elements, the first is to insure that economic policies benefit the most needy segments, such as creation of new jobs, especially in terms of escalating unemployment rateswithin educated persons, fairer distribution of new investments across Egypt. We have to consider poverty map while developing investment and economic policies.

The second element is social services, such as education, health, sanitation, access to potable water and establishment of peasants’ banks to improve their conditions all that shall increase the society’s abilities. The said reforms and initiatives shall have extraordinary impact on social justice.

As for the third element is giving special care to people with special needs, breadwinner widow and divorced women.

There is an urgent need to reconsider the current social protection system and the services provided by the social solidarity pension, Naser Bank, pensions and unemployment insurance,in case of the said sects face risks of old age or health deterioration, we shall insure decent life for them.

The Minister revealed the initiative of the social fund, one of its programs aims at the provision of job opportunities in public entities for the ones who are able to work for 100 days a year against specific salaries. This program shall be funded by the World Bank by $ 200 million.

The Minister concluded his statements assuring that the Government currently has no intention or no need for asking for aids from the International Monetary Fund, as it shall implement the necessary national economy reforms. It is an institutional transitional government, which paves the way for the future governments. The implementation of the necessary reforms shall only help Egypt in the medium and long term to create the environment favorable to business to cope with the international standards and to restore political and security stability.

Regarding waving of some countries by aid files, the Minister said that Egypt is open to all world states and wishes to cooperate with all of them, rejecting the conditioned aids. He stressed that he is not worry about refrain of some parties to support Egypt.
( source Ministry of Finance )