A farmer monitors a wheat mill at a farm in Egypt's Nile Delta, as the country struggles with the fallout from the Russia-Ukraine war. AP
A farmer monitors a wheat mill at a farm in Egypt's Nile Delta, as the country struggles with the fallout from the Russia-Ukraine war. AP
A farmer monitors a wheat mill at a farm in Egypt's Nile Delta, as the country struggles with the fallout from the Russia-Ukraine war. AP
A farmer monitors a wheat mill at a farm in Egypt's Nile Delta, as the country struggles with the fallout from the Russia-Ukraine war. AP

Egypt's PM details effect of Russia-Ukraine war on economy


Hamza Hendawi
  • English
  • Arabic

Egypt’s prime minister on Sunday offered a detailed and daunting review of the challenges facing his country’s economy as it reels from the effects of the Russia-Ukraine war.

In a televised news conference, Mustafa Madbouli sought to reassure Egyptians that his Cabinet was doing everything it could to weather the crisis but did not shy away from sharing the magnitude of the country’s economic woes.

He spoke of a significantly higher import bill, the flight of $20 billion in “hot [foreign] money” and a halt of tourist arrivals from the two warring nations who normally account for a third of all Egypt's visitors. Significantly, he also listed a number of fiscal targets that Egypt hoped to achieve.

“It’s a crisis added to another crisis,” said Mr Madbouli, referring to the economic woes caused by the coronavirus pandemic from which Egypt was recovering when the war broke out in February.

“Uncertainty is prevailing and no one can tell what will happen tomorrow."

The most populous Arab nation with 103 million people, Egypt reacted swiftly to the fallout from the war by devaluing its currency by 14 per cent against the US dollar, banning the export of vital foodstuffs and adopting a costly stimulus package to support the economy.

Prime Minister Mustafa Madbouli said quick action had prevented a collapse in many areas of Egypt's economy. EPA
Prime Minister Mustafa Madbouli said quick action had prevented a collapse in many areas of Egypt's economy. EPA

In March, Egypt opened negotiations with the IMF on technical support and possible funding to help it weather the crisis. Mr Madbouli said on Sunday that Egypt and the IMF were expected to reach an agreement within a month.

The fallout from the war has added to the effects of the disruption to the global supply chain caused by the pandemic, he said.

President Abdel Fattah El Sisi, the architect and driving force behind Egypt’s ambitious economic reform, has described the fallout from the Russia-Ukraine war as “unprecedented”.

In a series of televised comments since March, Mr El Sisi has shared details of the impact of the war on Egypt and how it intended to handle it, including incentives to bolster the stock market and increase the private sector’s share of investment.

Mr Madbouli gave more details of the crisis on Sunday and even acknowledged some of the more serious challenges, such as the growth of the public debt.

He said Egypt, the world’s largest wheat importer, was currently buying the product on world markets at $435 a tonne, up from $270 before the war. Russia and Ukraine accounted for the majority of Egypt’s wheat imports — a total of about 13 million tonnes last year — forcing it to seek alternative sources.

A bakery in Cairo. Reuters
A bakery in Cairo. Reuters

More than 70 million Egyptians rely on cheap bread provided by the state under a subsidy card system catering for low and middle-income Egyptians. Bread, a staple for most Egyptians, is a politically sensitive food item in a country where nearly half of the population is under or hovering above the poverty line.

The government has kept the price of subsidised bread unchanged, despite the surge in wheat prices, and moved to control the price of free-market bread after it rose by 50 per cent in the immediate aftermath of the Russian invasion. It also has offered financial incentives to local wheat growers to ensure they supply the state with nearly six million tonnes during the continuing harvest season.

Mr Madbouli said Egypt planned to spend 130 billion pounds ($700 million) to absorb the direct effects of the war in the fiscal year starting on July 1; and another 335bn pounds to offset its indirect effects.

He said the private sector would account for 65 per cent of all investment in the country within three years, up from about 30 per cent at present. He said the government aimed to reduce total debt to 75 per cent of gross domestic product in the next four years from the current 86 per cent, and the budget deficit to 5 per cent from 6.2 per cent

Egypt wants to achieve a primary surplus of about 1.5 per cent of GDP in the current fiscal year, which would rise to 2 per cent over the next four years, he said.

“Thanks be to God, Egypt has been able to face the world crises of the past three years,” Mr Madbouli said. “We would have seen total collapse in many areas had it not been for the economic reforms we introduced.”

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How tumultuous protests grew
  • A fuel tax protest by French drivers appealed to wider anti-government sentiment
  • Unlike previous French demonstrations there was no trade union or organised movement involved 
  • Demonstrators responded to online petitions and flooded squares to block traffic
  • At its height there were almost 300,000 on the streets in support
  • Named after the high visibility jackets that drivers must keep in cars 
  • Clashes soon turned violent as thousands fought with police at cordons
  • An estimated two dozen people lost eyes and many others were admitted to hospital 
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How to turn your property into a holiday home
  1. Ensure decoration and styling – and portal photography – quality is high to achieve maximum rates.
  2. Research equivalent Airbnb homes in your location to ensure competitiveness.
  3. Post on all relevant platforms to reach the widest audience; whether you let personally or via an agency know your potential guest profile – aiming for the wrong demographic may leave your property empty.
  4. Factor in costs when working out if holiday letting is beneficial. The annual DCTM fee runs from Dh370 for a one-bedroom flat to Dh1,200. Tourism tax is Dh10-15 per bedroom, per night.
  5. Check your management company has a physical office, a valid DTCM licence and is licencing your property and paying tourism taxes. For transparency, regularly view your booking calendar.
Company Profile

Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million

What is 'Soft Power'?

Soft power was first mentioned in 1990 by former US Defence Secretary Joseph Nye. 
He believed that there were alternative ways of cultivating support from other countries, instead of achieving goals using military strength. 
Soft power is, at its root, the ability to convince other states to do what you want without force. 
This is traditionally achieved by proving that you share morals and values.

Kanye%20West
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MATCH INFO

Burnley 0

Man City 3

Raheem Sterling 35', 49'

Ferran Torres 65'

 

 

ICC Women's T20 World Cup Asia Qualifier 2025, Thailand

UAE fixtures
May 9, v Malaysia
May 10, v Qatar
May 13, v Malaysia
May 15, v Qatar
May 18 and 19, semi-finals
May 20, final

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EPL's youngest
  • Ethan Nwaneri (Arsenal)
    15 years, 181 days old
  • Max Dowman (Arsenal)
    15 years, 235 days old
  • Jeremy Monga (Leicester)
    15 years, 271 days old
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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

Tips for job-seekers
  • Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
  • Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.

David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East

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Updated: May 15, 2022, 3:46 PM