January 31, 2016 / 11:31 AM / 4 years ago

Egypt increases tariffs on range of imports

CAIRO (Reuters) - Egypt has raised tariff rates on a wide range of imports, the official Gazette said on Sunday, the latest effort by the authorities to curb dollar spending on imports as the country struggles through a currency crisis.

Egypt, which relies heavily on imports, has been facing a shortage of foreign currency since a 2011 uprising drove tourists and investors away — major sources of hard currency.

It has already taken other measures to curb imports and aims to reduce its import bill by 25 percent in 2016 from $80 billion in 2015.

Head of Egypt’s customs authority Magdy Abdel Aziz said the new tariffs could raise Egypt’s customs revenue by around $128 million in the second half of 2015/16.

“The customs on household appliances, electronic devices, clothing, shoes, crystal, and plastics increased from 30 to 40 percent,” Abdel Aziz said.

“The decision is aimed a protecting national industry and stopping the draining of foreign currency,” he said.

The official gazette, in a decree dated January 26, published a list of hundreds of products ranging from food and clothes to toiletries and electric equipment. The new tariffs will be implemented on Monday, Feb. 1.

The document did not say how much the tariffs were raised by but it listed products with tariffs starting from 5 percent up to 40 percent.

Ahmed Shiha, head of the importers’ division at the Cairo Chamber of Commerce, was sceptical about the decision, saying that the tariffs could discourage imports.

A reduction in imports could limit revenues from customs duties.

“This is just the latest in a series of attempts to prohibit imports,” Shiha said.

Egypt, which is resisting pressures to devalue the pound, has been rationing dollars through monthly auctions and is keeping the pound artificially strong at 7.7301 pounds versus the dollar.

Its foreign reserves fell to around $16.4 billion in December from $36 billion before the 2011 uprising. The central bank has given priority of the dollar resources to importing essential goods over luxuries.

Many importers have reported that the lack of dollars has left their goods piling up at ports.

To prevent importers from sourcing their dollar needs on the black market, the central bank has limited the amount of dollars companies are allowed to deposit in banks, making it harder for importers to open letters of credit and clear cargoes.

To ease pressure on importers, the central bank this month increased the monthly limit to $250,000 from $50,000, but only on specific imports of essential foodstuffs, capital machinery, manufacturing components and medicines.

Reporting by Ehab Farouk; Additional reporting by Eric Knecht; Writing by Asma Alsharif; Editing by Raissa Kasolowsky

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