Ahmed Kamel – Egypt Daily News
A growing sense of frustration is sweeping through Egypt’s export sector as delays in activating the government’s new export subsidy program continue to disrupt business plans. Although the new Export Burden Rebate Program for the fiscal year 2025–2026 was announced over a month ago, its implementation remains stalled, prompting many exporters to postpone signing new contracts, industry sources told Asharq News.
The program jointly revealed by the Ministries of Finance, Investment, and Foreign Trade was scheduled to begin in July 2025. However, industry leaders say no official rollout has occurred, raising serious concerns about the government’s ability to deliver on promises aimed at stimulating export-driven growth.
Support Raised, But Complaints Persist
Shereef El-Sayyad, Chairman of the Export Council for Engineering Industries, criticized the delay, noting that the increase in subsidy rates—from 3% last fiscal year to 4.5% under the new program—remains insufficient to motivate exporters in light of slow disbursement and policy ambiguity.
Despite government efforts to double total export support allocations to EGP 45 billion in the 2025–2026 state budget, up from EGP 23 billion in the previous year, the slow implementation has undermined market confidence. While Egypt’s merchandise exports rose 22% in the first half of 2025 to $24.5 billion, the surge was largely driven by a 194% increase in gold exports, which alone contributed $4 billion, or over 16% of total exports, highlighting imbalances in the export portfolio.
Auto and Food Industries Reassess Export Plans
Although Egypt’s automotive sector is included in the new support scheme, companies remain hesitant. A senior executive at one of Egypt’s largest vehicle manufacturers told Asharq that exporters in the industry are now reassessing their strategies due to low subsidy rates and ongoing uncertainty.
Similarly, Alaa El-Wakeel, a member of the Export Council for Food Industries and General Manager at El-Mansour Trading & Distribution (CICLAM), stressed the urgency of issuing the program’s executive regulations. “Pricing decisions depend heavily on knowing the subsidy mechanisms. Delays make planning impossible, especially in food exports, which rely on tight margins and rapid turnover,” he said.
While the support rate for food products is expected to rise from 3% to 6% under the new plan, El-Wakeel warned that continued delays and the absence of final guidelines risk weakening Egypt’s competitiveness in global markets. “Exporters haven’t halted operations,” he added, “but future contracts and international exhibition participation are clearly affected.”
A Complex, Performance-Based Model
The 2025–2026 subsidy program introduces a more nuanced, data-driven approach to export incentives. Export councils will receive allocations based on several weighted criteria: 50% for value-added, 30% for export growth, 10% for production capacity, and 10% for employment levels. Additional factors include shipping costs, participation in exhibitions, compliance with environmental standards, branding, and transport logistics, weighted flexibly based on sector needs.
A special EGP 7 billion allocation has been set aside to support products with high economic complexity and potential for rapid export growth. The program also promises to clear subsidy disbursements within 90 days and without deducting outstanding tax obligations a key improvement welcomed by exporters.
Still, uncertainty prevails. Khaled Abu El-Makarem, Chairman of the Export Council for Chemicals and Fertilizers, noted that support levels for his sector are expected to range between 4% and 5%, but final numbers remain unpublished. “The new formula could enhance competitiveness, but without clarity or consistency, its impact remains theoretical,” he said.
Foreign Currency Goals and Economic Vision 2030
Egypt’s broader economic strategy relies heavily on expanding exports to bolster foreign currency reserves. The government aims to raise total foreign currency inflows to $145 billion by 2030, with $118 billion targeted from industrial exports alone.
According to figures from the Central Agency for Public Mobilization and Statistics (CAPMAS), Egypt’s exports rose 5.4% in 2024 to reach $44.8 billion. Non-oil exports comprised $39.4 billion of that total, helping offset lost Suez Canal revenue caused by regional instability in the Red Sea.
Minister of Investment and Foreign Trade Hassan El-Khatib noted earlier this year that exports currently account for only 10% of GDP—one of the lowest ratios globally. The government aims to double this share to 20–30% through more effective trade and investment policies.
A new five-year investment strategy, unveiled last week, aims to diversify export markets and attract $60 billion in foreign direct investment (FDI) by 2030. The plan targets raising merchandise exports to $145 billion over the same period.
Industry Frustration Mounts
Not all sectors are optimistic. Ahmed El-Sebaey, General Manager of the Egypt-Swiss Group for Pasta, Milling, and Concentrates, described recent developments as disappointing. “The export support for products like pasta was slashed from 13% to just 3% last year and applied retroactively. That sudden cut devastated revenue projections,” he said.
El-Sebaey criticized the inconsistency of government policy, saying the reduction in support came at a time when regional demand particularly from Sudan, Libya, and Gaza offered strong export potential. “The lack of incentives has forced many companies to shift focus to the domestic market,” he added.
“The biggest issue is the timing. Even when support is promised, it arrives years later if at all. By then, it’s irrelevant.”
Old Subsidies Still in Limbo
Lingering issues over unpaid subsidies continue to haunt the private sector. El-Sebaey said that companies, even those with no tax liabilities, are still seeing 50% of their overdue support funds deducted for taxes and fees. The remaining amount is paid in quarterly installments over long periods, often for claims dating back two to three years.
At the end of July, Deputy Finance Minister Ahmed Kouchouk announced that 2,000 exporting firms would receive EGP 5 billion in early August part of a 50% upfront payment under the new cabinet-approved framework for clearing backlogged export dues dating up to June 2024.
Since 2019, Egypt has launched multiple initiatives to resolve export support arrears, including seven phases of its “Instant Cash Settlement” initiative, which disbursed around EGP 70 billion to roughly 3,000 companies.
Auto Sector Caught Between Ambition and Reality
A source at one of the automakers enrolled in Egypt’s National Automotive Industry Development Program (AIDP) said the company is now reconsidering its participation due to the lack of clear export support metrics.
The source pointed to the requirement that participants scale production to 50,000 units annually by the program’s seventh year, a volume far exceeding local market demand. Without export incentives, achieving such targets would be financially untenable.
A Call for Policy Clarity
As Egypt works to position exports as a cornerstone of its economic growth strategy, the effectiveness of such plans hinges on timely execution, predictable frameworks, and consistent communication with the private sector. For now, many exporters are waiting contracts unsigned, markets untapped, and confidence wavering.
