Egypt govt mulls new support mechanism for exports

The government is debating a new system for export subsidies, with Prime Minister Mustafa Madbouli starting discussions on 29 January with the country’s various export councils to find a more effective support mechanism for exporters.

According to the current system, the government provides between eight and 12 per cent of the value of the exports to the exporters concerned provided that the products include 40 per cent local components.

Around 2,000 exporting companies are qualified to receive export subsidies, usually paid out after the deals are implemented.

However, the government has failed to pay its dues to qualified exporters for the last two years, with some putting the value of the arrears at between LE15 and LE21 billion.

“The delays in payments have had a serious impact on exporters who have not been able to include these funds when calculating the cost and revenues of export deals because there has been no accurate date for receiving them,” Mohamed Nassef, secretary-general of the Export Council for Engineering Industries, told Al-Ahram Weekly.

Exporters complained that they could lose their shares of foreign markets if they are not able to conclude future plans. Many Egyptian exporters have had difficulty maintaining their shares in international markets in the past few years because of difficult economic conditions.