Minister of Finance Amr El-Garhy said that the customs dollar rate will be down to EGP 15.75 starting Wednesday, currently at EGP 16. He said the new price will be effective from 1 March to 15 March.
The customs dollar rate is the rate that determines the amount paid by importers in local currency for customs. Egypt had reduced the customs dollar rate earlier this month to EGP 16, down from EGP 18.5 before, amid price hikes that led to stagnation in business.
Inflation previously reached unprecedented rates, hitting 30% by the end of January, according to the Central Agency for Public Mobilization and Statistics (CAPMAS). The hike came after flotation, fuel price surges, and the application of the value-added tax.
The main reason for the reduction of the customs dollar rate was the pound value gaining ground towards the end of January. The exchange rate at banks has declined to EGP 15.8 to the dollar, down from EGP 20 in December 2016.
Egypt is considered to be a country that heavily relies on imports to secure food and fuel needs, with imports valued at $60bn at the end of the last fiscal year, versus exports of under $18bn.
Cutting down the customs dollar rate is likely to reduce prices on the market, especially as banks are providing dollars at EGP 15-16 as well.
Secretary general of the Federation of Egyptian Chambers of Commerce (FEDCOC) Alaa Ezz said that the decline in customs dollar rate will reflect quickly on the prices of highly costumed products, including cars, electrical appliances, and poultry, adding that other commodities’ prices are also expected to go down in a month or two.
He told Daily News Egypt that the decline in the exchange rate along with the decline in customs dollar rates will enable manufacturers to re-calculate the pricing of their products.
Magdy Abdel Aziz, head of the Egyptian Customs Authority, has previously announced that the authority would be calculating the customs rates in foreign currencies on a bi-monthly basis starting March. The customs dollar rate used to remain fixed by the Central Bank of Egypt (CBE), but the flotation made that approach problematic, requiring a different mechanism.
Meanwhile, importers have, since the flotation, been calling for keeping the customs rate unchanged, in order to facilitate the process of properly calculating import values and customs posed on them.