Egypt raises import duties by up to 60 percent to cut deficit

Egypt is raising tariffs on some imported goods to up to 60 percent following a decree by President Abdel Fattah al-Sisi, the finance ministry said Sunday.

The ministry said the measure was introduced to "reduce imports," which have seen Egypt's trade deficit soar to more than $49bn.

Sisi's list of hundreds of imported goods set for a tariff rise includes electronic devices, fridges, soaps, cosmetics, various types of shoes, chocolate, and fruit, it said in a statement.

"The amendments ... aim to create the necessary climate to attract investment ... and give a strong boost toward increasing productivity, which is the basis of economic growth, as well as cutting imports, which... have widened the trade deficit to over $49bn."

Most duties were raised by half, the ministry said, with many products having their tariffs increase by up to 60 percent.

Importers criticised the increases, saying Egyptian suppliers did not produce enough of any of the goods included.

The move was likely to boost local monopolies rather than encouraging competition, they said.

"We cannot bear the increased prices. The dollar has already increased costs by 110 percent and then we put another 60 percent on at customs? People who don't have money, where will they buy?" said Ahmed Shiha, head of the importers division at the Cairo Chamber of Commerce.

"We do not have a single factory that makes a bottle of perfume ... So how are we protecting Egyptian industries?"

The move comes as Egyptians are struggling to cope with a wave of higher prices, including for imported goods, following six years of political and economic turmoil in the aftermath of the 2011 uprising which toppled longtime president Hosni Mubarak.

The International Monetary Fund last month approved a $12bn loan for Egypt, which has seen its foreign currency reserves plunge in recent years.

The IMF approval came after Cairo took crucial steps to meet its loan requirements, including slashing fuel subsidies, announcing a value-added tax, and floating the Egyptian pound.

But even before these steps, a dollar crunch over the past year had already driven up prices for imports including medicine and other basic goods, causing shortages.

Local manufacturers' production was also affected, with them needing to import parts or raw materials to make their finished goods locally.

The authorities are already implementing the new tariff system, which is expected to increase annual tariff revenues by $337m, the ministry said.

Egypt will abide by the free trade agreements it has signed with other countries, it said.