Egypt’s Minister of Finance Mohamed Maait announced Sunday that the government will shortly launch a new initiative for the immediate and full cash payment of all overdue dues to exporters.
The move will see the payments made at a 15% discount before the end of the year, with the Export Development Fund’s help, instead of scheduling payments over four or five years.
Maait said the initiative aims to provide cash liquidity that enables exporting companies to fulfil their obligations and preserve employment in light of the novel coronavirus (COVID-19) pandemic.
The initiative also aims to encourage companies to expand their investment activities, whilst creating more job opportunities. At the same time, it will enhance production capabilities, expand Egypt’s export base, and enhance the competitiveness of local products in global markets.
The minister said the initiative will be implemented in cooperation with Egypt’s banking sector. This will take place so that the Ministry of Finance can issue a guarantee to the Central Bank of Egypt (CBE) to provide the dues until the end of September. The finance will be provided to the exporting companies wishing to receive their full dues immediately with an accelerated payment discount of 15%.
Following this, the ministry will pay the amount and interest over three years for banks participating in this initiative, he said. He pointed out that this initiative reflects the continuous consultations with Egyptian export councils and major exporters.
Ahmed Kouchouk, Deputy Minister of Finance for Fiscal Policies, explained that if any exporting company wants to benefit from the new initiative, it will need to sign a final settlement agreement with the Ministries of Trade and Industry, and Finance. The settlement will cover the company’s arrears until the end of September with the Export Development Fund, under which it will obtain all arrears with an accelerated payment discount of 15%.
Nevine Mansour, Adviser for Deputy Minister of Finance for Fiscal Policies, said that, in October 2019, the cabinet approved five initiatives to settle the arrears of dues to exporters with the Export Development Fund until the end of June 2019.
These included the payment of all dues to small investors, up to a maximum of EGP 5m. Also, 30% of all exporters’ dues would be paid.
Mansour pointed out that 2,351 exporting companies have benefited from the government’s various initiatives relating to dues on arrears, amounting to a total of about EGP 3bn. A total of 337 exporting companies have cleared about EGP 1.2bn in their export dues, as well as and tax and customs obligations.
Moreover, 153 exporting companies have also benefited from the Investment Initiative that saw the first batch of their dues disbursed to the Export Development Fund, worth a total of EGP 1.8bn. Mansour added that a large number of companies are currently taking part in more than one initiative, and can join the new initiative.