Latest news with #MadaMasr
Mada
2 days ago
- Business
- Mada
House approves tax exemptions for UAE sovereign fund
To pave the way for more Emirati investments and secure the capital return on those already made in Egypt, the House of Representatives approved on Sunday a supplementary protocol to the Egyptian-United Arab Emirates tax agreement, granting the Emirati sovereign wealth fund a tax exemption in Egypt. The annex, issued by presidential decree earlier this year, recognizes Egypt's Sovereign Fund and UAE's Abu Dhabi Development Holding Company (ADQ) as 'government institutions' and consequently allows both funds to benefit 'from the tax exemptions stipulated in the agreement.' Upon their approved recognition in the agreement as government bodies, both funds are subject to Article 24, which grants tax exemptions on income generated by the government as well as its affiliated bodies, according to a joint report issued by the House planning and budgeting and Arab affairs committees and reviewed by Mada Masr. The agreement with the UAE, aimed at enhancing investment and trade relations between both countries, was initially approved by President Abdel Fattah al-Sisi in November 2019, under the Presidential Decree 558 of 2020. Emirati investments are crucial for Egypt at a time when the country's economy is deeply affected by Israel's aggression on Gaza and more recent attacks on Iran. Last year alone, ADQ, the Gulf country's largest sovereign fund, invested US$35 billion through the Ras al-Hikma development project in the North Coast. Half of the mega deal's proceeds were allocated at the time to easing the country's growing public debt. ADQ also acquired stakes in three state-owned petroleum companies for $800 million in November last year. Under Article 24's second section, the term 'government' includes 'the government, its agencies and institutions […] as well as any other institution or body mutually agreed upon from time to time by the governments of the two contracting states.' In the past, Egypt signed 60 similar agreements with other countries, some dating as far back as the 1970s, a Finance Ministry official told Mada Masr on condition of anonymity. These agreements are periodically reviewed and re-negotiated by both parties, the official said. When amendments are limited to one or two provisions, they said, they are issued in the form of a protocol and appended to the original agreement. In this case, the protocol was necessary because the original tax agreement was finalized in 2017, before either the Egyptian or Emirati sovereign wealth funds were established. Agreements to avoid double taxation typically require that the benefitting entities be explicitly named. According to the official, the supplementary protocol was added after it became clear during ADQ's financial dealings that the fund was not listed among the beneficiaries of the agreement, as it had not been named or specified in the original text. The exemptions outlined in Article 24 include taxes on three types of income: dividends, capital gain, and interest, a source in the House Planning and Budgeting Committee told Mada Masr. The interest exemption applies to all forms of government lending instruments, such as bonds, sukuks and deposits, among others. Upon the maturity of the financial instrument, the lender or investor receives the principal amount along with interest — or what is considered profit — from which the Finance Ministry deducts a 20 percent tax, as stipulated in the Income Tax Law, which applies to both Egyptians and non-Egyptians. While the government continues to offer incentives, including tax exemptions, to encourage Emirati investment in the domestic economy, it has been less forthcoming with other international entities. In November 2023, Euroclear, a platform for settling securities transactions that Egypt had hoped to join, requested a tax exemption on treasury bills and bonds as a condition for granting access to the government's debt market. The Egyptian government has yet to respond to the request.
Mada
3 days ago
- Business
- Mada
How will the Israel-Iran war affect the Egyptian economy?
The Egyptian economy continues to tremble with uncertainty in the face of the widening regional war escalated when Israel attacked Iran on Friday night. By the end of Sunday's trading session, the stock market's main indices declined, with total losses amounting to LE93 billion. The Egyptian pound also weakened, reaching a value of LE51 to the dollar, compared to nearly LE49.8 last week. As the war continues, Egypt faces a series of profound economic repercussions, sources in the Parliament and domestic banking and financial sectors told Mada Masr, marked most prominently by the exit of hot money from the country. Hot money is still the main factor propping up the pound's value, and if it goes, exchange rates will fall and, combined with global price hikes on oil and natural gas, Egypt could see a new wave of inflation. Hot money withdrawal Investors already began to withdraw hot money from the domestic market on Sunday. A hot money outflow ranging from US$3 billion to US$4 billion is expected this week, a financial analyst at an investment firm told Mada Masr. The forecast was echoed by Mahmoud Sami, a member of the Senate Financial and Economic Affairs Committee, and Saad Ali, a financial analyst at Okaz Investments. The three sources also expected that the withdrawal of hot money could cause the exchange rate to rise to a rate LE52 to LE52.2 per dollar. Egypt's risky reliance on hot money was laid bare following Russia's invasion of Ukraine, when investors withdrew nearly $22 billion out of Egypt to seek safer debt markets. The resulting capital flight triggered a severe foreign currency crisis that persisted for two years, during which the dollar surged from LE15 to LE50. Current estimates place the amount of hot money in Egypt's bond market at $30 to $35 billion, according to the three sources. Hot money inflows are a key pillar in maintaining the stability of dollar liquidity and ensuring the availability of foreign currency in the economy — a factor that has been reflected in the relatively stable exchange rates over the past several months. Exchange rate and futures exchange The price of the dollar began to rise on Sunday, posting a rate of LE50.56 compared to LE49.5 before Israel's attacks on Iran, according to central bank data. A sharper rise was recorded in other Egyptian banks on the same day, with the price of a dollar reaching LE50.87 in the Abu Dhabi Islamic Bank. The exchange rate then slightly stabilized on Monday, dropping by 0.33 points to LE50.23. Rates on Credit Default swaps (CDs) were also negatively impacted, rising to 560.3 points and marking a 12 percent increase compared to rates ahead of the Israeli aggression on Iran. The pound's one-year forward exchange rate, also known as Non-Deliverable Forwards (NDFs), rose as well from LE58.80 to LE60 per dollar on Sunday, financial analysts told Mada Masr. Oil and fertilizer prices In addition to the rise in the pound's exchange rate, oil prices surged by seven percent after Israel attacked Iran. On Friday, prices peaked at $77 per barrel, up from around $60 at the start of June, before stabilizing around $70. The spike followed Israeli strikes on Iran's oil and gas fields, which account for nearly 11 percent of total production by OPEC oil-exporting countries. Natural gas prices also saw a rise by nearly 13 percent following the regional escalation. Israel's decision to halt its natural gas supply to Egypt in late May prompted the government to cut gas supplies to fertilizer factories, leading to a suspension of their production and, consequently, their exports. While this comes amid rising global prices and a halt in local market supplies, summer season crops —which began last month — will not be affected, Hatem Naguib, head of the Federation of Egyptian Chambers of Commerce Vegetable and Fruit Division, and a former Agriculture Ministry advisor told Mada Masr. Both sources, however, said the situation could become concerning if the halt in fertilizer production drags on, warning it could lead to a shortage of fertilizer supplies at the start of the winter season and consequently drive up prices. Higher insurance costs for shipping A rise in maritime transport costs has also been recorded, which translated into higher insurance costs for shipping due to the increased risks of an escalating Israeli-Iranian war, former member of the Suez Canal Authority Wael Kadoura told Mada Masr. The hikes come as 80 to 85 percent of Egypt's total imports are transported by sea, Kadoura noted, warning that continued military escalation between Israel and Iran could worsen the crisis of shipping companies avoiding the Suez Canal and increase the likelihood of re-routing via the Cape of Good Hope. Fees levied on vessels passing through the Suez, which links the Red Sea and the Mediterranean, form a key component of Egypt's budgetary resources. These revenues have already taken a hit, with the central bank recording a 24.3 percent drop in receipts for FY 2023/24 due to maritime disruptions stemming from Houthi attacks aimed at deterring Israel's ongoing war on Palestinians. A boost to inflationary pressures The rise in both the exchange rate and in commodity prices globally, paired with the increased costs of insurance on shipping, will increase the pressure on the general budget, the MP and two financial analysts explained, and deepen the rise in inflation rates, which have already been witnessing a rise over the past three months due to fuel price increases. According to the sources, the government plans to raise fuel and electricity prices again at the start of the upcoming fiscal year in July, in line with International Monetary Fund conditions tied to Egypt's US$8 billion loan program. Energy prices have already been raised multiple times in recent years under a plan to phase out subsidies by the end of 2025. A source in the House of Representatives Planning and Budgeting Committee told Mada Masr on condition of anonymity that the recent regional escalations have sparked renewed talks with the IMF. According to the source, the fund has shown some flexibility on the timeline for reaching cost-recovery pricing if global oil prices continue to rise. However, this flexibility does not apply to the upcoming consumer price hikes, he noted. Consumers have been affected by a noticeable rise in inflation rates during the past three months, after nearly four months of a slowdown in inflationary pressures. In May, inflation witnessed the sharpest rise in eight months, with a 16.5 percent increase compared to the same month last year and a 1.8 percent hike compared to April. Analysts pointed to energy prices as the main factor behind the surge. In televised statements on Monday, attempting to appease the public amid the regional escalations, Cabinet spokesperson Mohamed al-Homsany reiterated the government's commitment to its 'promise' not to raise fuel prices before October, though he acknowledged that global fuel price fluctuations, especially amid the Israel-Iran escalation, will likely impact efforts to contain inflation rates. The two financial analysts agreed that the current regional escalations and their repercussions on the Egyptian economy will likely prompt the central bank to hold off on the monetary easing policy it has been aggressively pursuing in April and May. They therefore predicted that the central bank's Monetary Policy Committee will fix interest rates in their upcoming meeting to preempt further inflation.
Mada
3 days ago
- Business
- Mada
Govt imposes country-wide power rationing plan after complete halt in Israeli gas supply
With war breaking out between Iran and Israel and knock-on effects disrupting regional and international energy supplies, the government has decided on Monday to start implementing electricity-rationing measures across the country. An unnamed government source broke the news to state-aligned outlet Masrawy, stating that the plan is 'nothing new' and marks a return to the state's electricity-saving measures implemented in previous years. Israel completely halted its natural gas supply to Egypt over the weekend, after shutting down production amid its military aggression on Iran, sources told Mada Masr on Friday. The stoppage prompted Egypt to introduce the rationing plan, which entails reducing lighting in public spaces and enforcing closing hours for commercial establishments, while residential buildings are to remain exempt. 'Warnings' were issued by the Local Development Ministry to governors across the country for the power rationing plan to be strictly monitored, another unnamed source in the ministry told Masrawy later on Monday. By evening, directives had been passed in Giza, Alexandria, Daqahlia, Aswan and other governorates to begin and monitor the plan's enforcement. Lighting reductions began that night on streets, roads, and in government buildings. Meanwhile, the summer official opening and closing hours for shops, malls and workshops — announced in April — were now to be 'strictly' implemented. Hospitals and service buildings were exempt, as were residential buildings, which had faced hours-long cuts in the past two summers due to surging seasonal consumption. According to the government source that spoke to Masrawy, the plan aims to reduce pressure on power plants. Natural gas remains Egypt's primary energy input for electricity generation, accounting for 75 to 96 percent of power in 2019. Mazut, a crude oil byproduct and cheaper alternative, has also been used by the government to fuel power plants, though its domestic production only covers 12 percent of Egypt's electricity needs, prompting the government to expand efforts to ramp up output or imports. The plan's re-implementation comes a few days after Prime Minister Mostafa Madbuly addressed the public in a press conference on Saturday, promising to avoid renewed blackouts while calling on citizens to ration their usage and bear in mind the 'huge financial burden' on the state. He added that diesel reserves are double those of last summer. Egypt first implemented systematic residential blackouts in July 2023, prompted by surging summer demand, a sharp decline in domestic gas production and a halt in Israeli gas imports since it launched its war on the besieged Gaza Strip. Egypt's strategy at the time included rolling blackouts in residential areas, applied at varying lengths depending on the area. While residential areas in Cairo faced outages of one to three hours, farther afield, the blackouts ran much longer. Areas in southern Egypt suffered six-hour blackouts, which extended to 13 hours the following year, in 2024. The North Coast and Marsa Matruh were exempted to 'protect' citizens on their summer breaks. Madbuly's statements came amid uncertainty around the extent and duration of the natural gas shortage. After Israel attacked Iran over the weekend, a governmental source told Mada Masr that Egypt's imports of Israeli gas had completely stopped. A former Petroleum Ministry official said that while the supply did not completely stop, it dropped to its lowest levels. The decline in natural gas imports has already affected gas supplies to the domestic industrial sector. While Egypt still produces most of its own gas, declining output from its largest field, Zohr, and rising domestic demand have forced it to increasingly depend on Israeli imports. Previously, the government would liquefy and export surplus volumes of Israeli gas to generate foreign currency. But with the growing energy deficit, only small volumes of Israeli gas are being exported, with the rest used to power the national grid and support industry.
Mada
3 days ago
- Mada
‘Like they were hunting people': Over 50 killed in one of deadliest attacks at GHF distribution points
In one of the deadliest incidents in the string of killings by Occupation forces firing at Palestinians seeking aid, over 50 people in southern Gaza were killed and more than 200 injured in western Rafah. The shooting broke out late Monday night and continued into the early hours of Tuesday. Israeli forces, positioned near the Tel al-Sultan distribution site run by the Gaza Humanitarian Foundation (GHF) — the upstart organization with ties to Israeli and American military and intelligence agencies — opened heavy fire on civilians waiting for aid. One eyewitness, Tarek al-Bareem, went to the distribution site on Monday night, hoping to be among the first to access aid after the GHF announced it would begin distribution at 10 am. By then, thousands had already gathered near the route the Israeli military designated to reach the Tel al-Sultan site, including in the Fish Fresh and Sea Huts resorts on the coast and in the Tahlia roundabout in southern Khan Younis. Israeli forces stationed nearby opened fire toward the crowds from their vehicles and from quadcopter drones, leaving many injured, according to Bareem. The shooting escalated overnight, especially in Tahlia. 'I saw several people fall in front of me,' Bareem said. 'I was hiding behind a small stone barrier, watching. A group of at least ten young men had also taken cover nearby. But soon, an Israeli artillery shell hit their position, killing them all.' Israeli bulldozers began moving toward the area where their bodies had fallen. 'One of them started shoveling sand along with the bodies, covering them with dirt,' he said. Israeli forces continued firing from quadcopters, vehicles and naval boats toward anyone in the area, he said. People tried to shield themselves by taking cover behind sand dunes and the rubble of destroyed buildings. 'It's difficult for civil defense crews and ambulances to access this area. So many bodies are still there,' he added. The bodies of 59 people along with more than 200 who were injured reached Gaza's hospitals on Tuesday from the Tahlia roundabout massacre, Gaza's Health Ministry said. Amid the Israeli fire, the distribution point opened nearly four hours earlier than announced and remained open for only 30 minutes, Bareem said. Only a small number of people were able to enter. 'When we saw some being let in, we tried to approach, but the Israeli forces resumed heavy fire,' he said. Conflicting announcements from the GHF over the past days have left thousands of aid seekers in a 'trap,' eyewitnesses told Mada Masr — caught between no access to desperately needed aid and Israeli fire. Another aid seeker, Ramez, left Khan Younis and arrived five minutes before the scheduled opening at the Alam area in northern Rafah — just a few meters from the designated route, he told Mada Masr. But by that time, the gates were already shut, distribution over, and Israeli forces were firing heavily in the direction of the crowd. Many were wounded, and others tried to rescue them under fire. Shortly after, the shooting eased, but soldiers and tanks were heavily deployed in the area. 'People began inching toward the designated route and the shooting resumed,' he said. 'It felt like they were hunting people.' A few did reach the aid point, Ramez added, but US personnel sprayed pepper spray in their faces, and many others were shot by Israeli forces. 'After witnessing these horrific scenes, I left,' he said. 'There were still many bodies and wounded people lying around.' The deadly attack in Tahlia brings the total number of those killed while waiting for aid — and whose bodies were brought to hospitals — to 397, with over 3,031 injured, according to Gaza's Health Ministry.
Mada
4 days ago
- Politics
- Mada
Sumud caravan to Gaza suspends operations after Cairo, LNA block movement
After days of intimidation by eastern Libyan authorities and the arrest of at least 13 participants, the Sumud caravan, which had set off from Tunisia last week in an attempt to break the siege in Gaza, announced Monday that it would forego the remainder of its journey, organizers told Mada Masr. 'We were supposed to reach the Rafah border crossing today, but that didn't happen because the authorities in eastern Libya refused to allow us to pass. They made it conditional on getting official approval from the Egyptian authorities — approval that Egypt never gave. The Libyan side told us: If you don't get a permit from Egypt, we can't allow you to proceed toward the border,' an organizer of the caravan said. An eastern Libyan government official, an Egyptian official and an Egyptian researcher close to sovereign bodies in Cairo said that Cairo requested authorities in eastern Libya block the delegation from continuing through Libya. Egypt, the eastern Libyan government official told Mada Masr, was keen to avoid potential embarrassment amid growing pressure to allow the activists to reach Rafah and push for aid delivery and an end to the siege on food and medicine in Gaza. The caravan, dubbed the Sumud Delegation, left Tunisia last week with around 14 buses and 100 vehicles. Even though the 1,500 people — whose numbers would swell as more people from Tunisia, Libya, Algeria and Sudan joined their ranks — were not carrying aid, organizers presented the delegation as a 'symbolic act.' Their departure from Tunisia into western Libya at the beginning of last week went smoothly at first, a member of the caravan told Mada Masr. 'As we moved from city to city, people went out to greet us in the streets, waving Palestinian flags, sprinkling rose water on our vehicles, ululating with joy. It was a spontaneous, genuine scene. In every city we stopped, there was food waiting, sweets, invitations to stay the night and offers to help,' the member said. But all of that came to a halt on Thursday evening, when the caravan reached the outskirts of the city of Sirte, the effective dividing line between east and west Libya, which is governed respectively by the Libyan National Army under Khalifa Haftar and the Tripoli-based Government of National Unity. 'It felt like we had fallen into a void,' a second member of the caravan told Mada Masr, describing arriving at the entrance to the city. 'We thought we were simply moving between Libyan cities, but, at that moment, it felt like we had crossed into a different country.' Over the next several days, the caravan faced intimidation from eastern authorities under the sway of Libyan National Army commander Khalifa Haftar. Plainclothes security officers infiltrated the caravan, one participant said, 'sitting near our tents, watching our movement, asking questions about everything.' Eastern authorities split the group into three separate convoys. They then imposed a total communications blackout and prevented movement and access to supplies, confining participants in a state of both security isolation and humanitarian chaos. Those who left were not allowed to rejoin the main group, which remained stranded for three days awaiting permission to continue east toward the Egyptian border. 'At night, in the thick darkness, there was no electricity, no toilets, barely enough water — only the dim light of phone screens,' the first participant said. 'Even aid deliveries were barred until the second night, only allowed in after interventions by the Red Crescent and donors from Misrata. The aid was meticulously searched by the same men in plain clothes, scattered among us.' In the ensuing days, a number of participants were arrested, including activist and blogger Abdel Razzaq Hammad. The Libyan National Human Rights Commission called on eastern authorities to release those detained, holding relevant authorities fully responsible for their safety and fate. The two participants described personal belongings being stolen, participants being searched or detained without legal warrants, and the assault on the convoy's spokesperson, who was beaten and dragged away wrapped in a blanket, only to be released after an officer intervened. By Saturday morning, the caravan decided to retreat from Sirte, heading back to the west, 200 kilometers outside Misrata. There, organizers tried to negotiate with eastern authorities and find alternatives. 'Our hearts are broken. We can no longer bear the images coming out of Gaza. If no one else will move, then let us. Don't stop us from trying to stop the genocide of women and children, to stop lives being taken away while we stand helpless,' the first participant said at the time. The situation escalated after pro-eastern Libya figures and media outlets circulated video clips of a supposed participant saying that 'Sirte was part of the organization' and began smearing the convoy as co-opted by the Muslim Brotherhood. According to an eastern government official, however, the decision to block the convoy's progress was not down to any offense or suspicion of Islamist activity. Instead, Egyptian officials had communicated with authorities in eastern Libya, urging them not to permit the convoy through due to lack of permits and approvals, and to spare Egypt embarrassment, according to the Libyan source. A source at a research center affiliated with sovereign bodies in Egypt and an Egyptian official acknowledged the pressure from Cairo. 'When the caravan was coming closer to the Egyptian western borders, the state requested the Libyan authorities intervene to avoid a border situation,' the Egyptian official said. Egypt has in recent days arrested and intimidated international activists who converged in Cairo to partake in the Global March to Gaza. The march organizers directed all participants to leave Egypt on Monday and suspended plans to head to Rafah. In its announcement of the end of the convoy, the organizers of the Sumud Delegation said that 13 participants continued to be held in custody and called for their immediate release.
