CAIRO, 9 September 2004 — Egyptian Prime Minister Ahmed Nazif’s government announced yesterday sweeping tariff cuts on most imports in a move seen as consolidating reforms and the privatization of the sluggish economy.
“This is the first major move by the government of Ahmed Nazif,” Finance Minister Yussef Boutros-Ghali told a press conference.
The tariff cuts — from 14.9 percent to nine percent — will see state revenue drop by about three billion Egyptian pounds ($460 million) over the next 18 months, Boutros-Ghali said. The “radical decision” announced by Boutros-Ghali come less than two months after the formation of the Nazif government and is seen here as a first step to reform Egypt’s ailing economy in a bid to spur growth.
Boutros-Ghali expected economic growth over the next 18 months to rise by a further one to 1.25 percentage points as a result of the tariff cuts, which went into effect yesterday, a day after Egyptian President Hosni Mubarak signed a decree for their go-ahead.
Egyptian growth is was 4.1 percent in the fiscal year that ended in June. “The aim of this decision is to create an economic and legal climate that will guarantee a high level of operations of economic institutions” as well as to reduce product costs for Egyptian consumers, Boutros-Ghali said.
The tariff cuts apply to all imported goods, with the exception of alcoholic drinks, tobacco products and cars with an engine size greater than 2,000 cc. Cars whose engine size is under 1,600 cc will benefit from a cut in duty from 104 percent currently to 40 percent. “Machinery, equipment, spare parts and products needed in the manufacture of parts needed in the technology and computer industry will also be exempt of tariffs,” which previously ranged from six to 21 percent, he said.
