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Egypt’s dollar bonds were higher by 1.0-1.5 points after the cabinet approved a draft law to eliminate tax exemptions for state entities in an attempt to attract foreign investment against a backdrop of a severe forex shortage. The law follows requests by the IMF for Egypt to level the playing field between private and public investors as part of a $3bn financial support agreement signed in December. The taxes that were previously exempted for state entities included value-added taxes for goods and services needed for armament, defense and national security, real estate taxes, income taxes and import tariffs. These tax exemptions have kept foreign investors away amidst concerns that state-owned enterprises use them to gain an unfair advantage. However, the draft does note that some privileges enjoyed by the army who owns some of these state-owned enterprises, seem to be retained. The draft law will require approval by parliament and the President before it is officially passed.
Egypt’s 5.25% 2025s jumped 1.5 points to trade at 76.7 cents on the dollar, yielding 18.15%.
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