Egypt’s trade balance narrows as oil prices rise
Egypt’s trade balance narrowed 27 billion Egyptian liras ($7.14 billion), in the first half of 1999, to LE 23 billion in the same period in 2000, reported the Central Agency for Mobilization and Statistics (CAPMAS). Egypt's exports increased by 40 percent in the first half of 2000 by LE8 billion ($2.1 billion), from the amount reported for the first six months of 1999.
But, according to Al Ahram, the improvement may only be illusory. The rise in the price of crude oil accounts for a major portion of this export increase, with crude oil exports rising from LE337 million during the first half of 1999 to LE579 million in the same period in 2000. Exports of refined oil rose from LE1.3 billion during the first half of 1999 to LE2.6 billion during the same period in 2000.
Speaking to Al Ahram. Hilal Sheta, the deputy chairman of the exporters' division of the Egyptian Federation of Chambers of Commerce (EFCC), said that the figures are misleading because they look at export performance purely in terms of monetary value, rather than considering the actual quantities of goods that were sold.
Still CAPMAS also reported that agricultural, textile, pharmaceutical and leather exports increased from LE2.1 billion during the first half of 1999 to LE2.6 billion during the same period in 1999.
The exporters interviewed by Al Ahram in its report, complained bitterly about a variety of bureaucratic and financial obstacles, which make it difficult for Egyptian producers to compete on the world markets. These include insufficient tax incentives, a fixed exchange rate and frequent changes in export policies.
For instance, said Mohamed Qasim, chairman of the Egyptian Garment Exporters Association (EGEA), two weeks earlier the government without warning had ended a system by which producers had been able to import materials for use in manufacturing goods for export using non-liquid assets as a guarantee for up to 80 percent of the credit sought. The EGEA was calling for this latest decree to be annulled, and indeed had approached the government about the issue
Manufacturers were also calling for a cut in taxes levied on inputs for the production. The government recently installed a program by which sales tax on the import of capital goods can be paid in installments. The business community says falls short of what is necessary, and has called for an abolition of all taxes related to production for export.
Not only are the manufacturers looking for lower taxes, but they also want low-interest loans, as a means to encourage investment in export-oriented projects. All this, they say, is necessary if the government is going to reach its target $10 billion (LE38 billion) worth of exports by 2005. — (Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)