Egypt to issue $3 bln Eurobond in Sept-Oct, impose VAT by Sept

Egypt’s finance minister said on Monday the country would look to issue a $3 billion Eurobond between September and October, and would implement a long-delayed value-added tax (VAT) by September.

Egypt has searched for a variety of funding sources, from development loans to foreign grants and aid, to plug its financing needs as it contends with an acute dollar shortage that has hampered its ability to purchase from abroad.

It has delayed its return to the international bond market after selling its first Eurobond in five years in June of last year.

“We are studying a bond issuance of $3 billion on the international market between September and October of this year in order to fill part of the budget’s financing gap, which is expected to reach $10 billion,” Finance Minister Amr el-Garhy said.

Egypt has attributed the bond delay to turbulent financial markets and the slowdown in China, which has reduced liquidity for emerging markets.

Garhy also said he expected a value-added tax, that has been delayed on fears of inflation, to be applied in September “should parliament approve it”.

“Once applied it is expected to bring in revenues during 2016-2017 (financial year) ranging from 20 (billion) to 25 billion Egyptian pounds($2.25 billion-$2.82 billion).”

The law is expected to replace the current sales tax and broaden the tax base by subjecting all services to the tax while maintaining the principle of exempting basic goods and services that affect the poor.

source: Reuters