(Photo from Centre for International Governance Innovation website)
By Doaa Farid
Finance Minister Ahmed Galal agreed with Emirati Secretary of State Sultan Ahmed Al-Jaber to strengthen cooperation with the UAE in the fields of energy, investment in infrastructure, health insurance and public debt, according to a finance ministry statement on Thursday.
The pair also agreed to give a “significant boost” to the private sector cooperation between the two countries.
The government is seeking to increase spending in healthcare and social protection programmes, adding that Ministry of Finance is working in cooperation with other ministries to increase efficiency of public spending.
The interim government adopted an economic stimulus plan in August which aims to foster 3% growth over the current fiscal year and reduce the budget deficit from 14% to 9%.
“Public revenue reforms include the activation of new real estate tax law, especially because of its social aspect, as it will allocate a quarter of the outcome to slum development, and another quarter to improving localities and citizen services,” read the statement.
The Minister of Finance earlier announced that real estate tax law will be effective at the end of July. The law will affect all new homeowners, who will pay a tax of 10% on the total value of their property. However, hospitals, educational institutions, non-profit charities and properties which are valued at less than 500,000 EGP will be exempted from paying taxes.
About EGP 3m revenues are expected after applying the first phase of this law.
This came during a meeting between Galal and Al-Jaber, with the presence of the Emirati Ambassador in Egypt, to discuss economic and financial cooperation between both countries.
Galal praised the UAE’s support for Egypt, which he said according to the statement “is not limited to the economic side, but also includes political support in international forums to explain the situation and developments of 30 June revolution.”
The UAE was among the first Gulf countries to congratulate Egypt in the wake of removing former president Mohamed Morsi following nationwide protests on 30 June.
Following Morsi’s ouster, the UAE, along with other Gulf countries, announced new financial aid packages to Egypt. The UAE aid to Egypt comprised a $1bn grant and a $2bn interest-free deposit in the central bank. It also sent seven shipments of fuel worth $225m in July.
Meanwhile, the UAE minister expressed his country’s trust in Egypt’s ability to overcome the crisis and achieve significant economic growth. Al-Jaber also added that he would meet with the heads of International Monetary Fund and World Bank to confirm his country’s confidence that Egypt is “on the right track”.
Al-Jaber announced 22 new investment projects are to be implemented in the Egyptian market with Emirati fund.
UAE crown prince and deputy supreme commander of the armed forces Mohammed bin Zayed Al-Nahyan had met earlier in September with Defence Minister Abdel Fatah Al-Sisi to discuss means of strengthening the economic, political and security ties between Egypt and UAE, with the former confirming his country’s support for Egypt’s interim government and praising the Egyptian military’s “national role” in handling the current crisis.
Galal also mentioned in the meeting that public debt is increasing, amounting to 92% of GDP – mostly internal debt.
Regarding energy subsidies, Galal revealed a programme to adjust the distribution system of petroleum products over the next five years. The first phase of this programme began by issuing smart cards to monitor the distribution of diesel and fuel in the local market “so as to ensure that all petroleum products don’t leak out abroad,” Galal said, adding that this will save EGP 20bn for the public treasury.
The smartcard system would automate the nationwide distribution of diesel and gasoline while also helping the government address shortages and combat smuggling, according to Galal.
