Moody's upgrades Saudi Arabia's credit rating to Aa3 with stable outlook    Riyadh Metro to begin partial operations next Wednesday: Report    Al Okhdood halts Al Shabab's winning streak with a 1-1 draw in Saudi Pro League    Mahrez leads Al Ahli to victory over Al Fayha in Saudi Pro League    Al Qadsiah hands Al Nassr their first defeat in the Saudi Pro League    Saudi musical marvels takes center stage in Tokyo's iconic opera hall    Downing Street indicates Netanyahu faces arrest if he enters UK    London's Gatwick airport reopens terminal after bomb scare evacuation    Civil Defense warns of thunderstorms across Saudi Arabia until Tuesday    Saudi Arabia, Japan strengthen cultural collaboration with new MoU    Slovak president meets Saudi delegation to bolster trade and investment ties    Saudi defense minister meets with Swedish state secretary    Navigating healthcare's future: Solutions for a sustainable system    Al Khaleej qualifies for Asian Men's Club League Handball Championship final    Sixth foreign tourist dies of suspected methanol poisoning in Laos    Katy Perry v Katie Perry: Singer wins right to use name in Australia    Trump picks Pam Bondi as attorney general after Matt Gaetz withdraws    Al-Jasser: Saudi Arabia to expand rail network to over 8,000 km    Sitting too much linked to heart disease –– even if you work out    Denmark's Victoria Kjær Theilvig wins Miss Universe 2024    Order vs. Morality: Lessons from New York's 1977 Blackout    India puts blockbuster Pakistani film on hold    The Vikings and the Islamic world    Filipino pilgrim's incredible evolution from an enemy of Islam to its staunch advocate    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Egypt plans to introduce VAT
By Querubin J. MinasSaudi Gazette
Published in The Saudi Gazette on 04 - 07 - 2011

Egypt is set to introduce VAT and reduce energy subsidies as the government recently turned down loans from the IMF and World Bank of over $5 billion on concerns about running too large a deficit and associated higher external debt, Fitch Ratings said in its special report "Egypt Reins in the Deficit, But Outlook Dependent on Politics" made available Sunday.
IMF backing for Egypt's economic program would have boosted confidence during the political transition, but the government said it will proceed with its main agenda anyway despite the expected impact on inflation and real incomes.
Other multilateral support will still go ahead and bilateral support from Saudi Arabia and the US has already begun to flow.
Pledged external support still exceeds $20 billion (7 percent of GDP).
The daily Al Borsa quoted Egypt's Trade Minister Rachid Mohamed Rachid as saying earlier that Egypt in July will resume its gradual elimination of energy subsidies to industries that are not energy intensive.
The government suspended a plan to reduce the subsidies after the 2008 global economic crisis.
"With the start of the new fiscal year, the government will resume the policy it laid down three years ago to eliminate energy subsidies to factories," the paper quoted the minister as saying. Egypt's fiscal year starts July 1.
Energy-intensive industries already receive energy at international prices, Al Borsa cited him as saying.
"The second half of the current year will witness the first stage of price rises, then annual increases will be implemented to reach world prices," Rachid said.
Cement firms obtaining licenses in the coming period will be responsible for providing their own energy, should the Petroleum Ministry decide not to supply them with their needs. They may resort to importing oil and gas if needed, Rachid said.
Energy subsidies cost the government 60 billion Egyptian pounds ($10.95 billion) in fiscal year 2007/08, up from 57 billion pounds in fiscal 2006/07. Of this, the government spent 20bn pounds on gas subsidies to energy-intensive companies.
Egypt's budget deficit rose to 65 billion pounds in the seven months to January 31, up from 39 billion pounds in the same period a year earlier, a Finance Ministry report said last month.
Fitch Ratings said in the report that Egypt's decision to rein in its budget deficit in FY2011/12 "sends a strong signal at a politically sensitive time, when expectations are high, that Egypt sees the need to resume fiscal consolidation as soon as possible."
The ratings agency affirmed Egypt's 'BB' Long-term foreign currency Issuer Default Rating (IDR) on June 28, removed it from Rating Watch Negative and assigned a Negative Outlook.
Egypt aims to reduce the budget deficit in fiscal year ending June 2012 to 8.6 percent of GDP, significantly down on the likely 9.5 percent or more in FY2010/11 and an even bigger drop compared with the 10.9 percent of GDP draft budget, the report said.
The political events of January-February 2011 badly hurt the economy, with the GDP declining by 8.8 percent qoq and 4.2 percent yoy in Q111, the biggest contraction on record, Fitch said.
Tourism was hardest hit, down 80 percent in February, and investment dropped by 26 percent, with a net outflow of FDI.
However, tourism - a key economic driver, showed improvement since February. Arrivals are still down a third yoy but 4x higher than in February.
Yet, Fitch said the economy could still contract yoy in Q211 and growth for FY2010/11 will be around 1.5 percent, rising to perhaps 3 percent in FY2011/12.
The current account deficit did not widen appreciably in Q111, despite the drop in tourism, as exports continued to grow, workers remittances held up and higher oil prices helped.
However, reserves still fell by almost a quarter by May as FDI dried up and foreign portfolio investment exited. The reserve decline slowed in May, as outflows stabilized, tourism recovered and oil prices rose further.
__


Clic here to read the story from its source.