رئيس الرقابة المالية: سوق الكربون الطوعي يعطي لمصر الريادة إفريقياً

The Financial Regulatory Authority, headed by Dr. Mohamed Farid, completed its ongoing dialogue through the platform that it launched in coordination with a number of business groups, as part of its constant keenness to review all developments and ongoing reform efforts to develop and enhance the role of the non-banking financial sector in the national economy.

The last symposium reviewed the latest developments related to developing and updating accounting standards and launching the voluntary carbon market, which contributes to maximizing the development impact of the regulations and policies taken by the Authority.

Announcing the rules for trading and settling carbon certificates within weeks

A few days ago, the Authority had organized, in cooperation with the Center for International Private Enterprise (CIPE), a workshop that highlighted the Authority’s efforts to work on digitizing non-banking financial transactions, then it was followed by a meeting with members of the American Chamber of Commerce to talk about the latest updates and decisions regarding the activities subject to the Authority’s oversight. In light of working to create a favorable environment for the private sector that pushes towards more work, production and job creation.

Dr. Mohamed Farid, Chairman of the Financial Regulatory Authority, gave a keynote speech during the meeting organized by the Center for International Private Enterprise (CIPE) regarding the voluntary carbon market and the development of Egyptian accounting standards, in coordination with the Federation of Egyptian Industries, represented by the Environmental Compliance Office, and with the participation of Ahmed Kamal, Executive Director of the Office, and the Egyptian Society. For credit and risk management, with the participation of Ayman Yassin, Director General of the Association, and with the participation of representatives of the business community in various sectors, members of the Federation of Industries, and representatives of several entities and companies interested in the topics under discussion and dialogue.

The development journey of launching the first voluntary carbon market

During his speech, Dr. Farid reviewed the most important stages of the development journey of launching the first African voluntary carbon market for trading carbon emissions reduction certificates, which is the market that gives Egypt leadership in the continent of Africa, and stimulates companies to engage significantly in activities and operations to reduce carbon emissions and achieve returns as a result of this procedure not only In keeping pace with international standards and requirements if it wants to trade with global markets, or register and trade these certificates and achieve returns, he also touched on the most important efforts to develop Egyptian accounting standards, where he described what took place as a comprehensive correction revolution that affected the provisions of many accounting standards that took into account all economic variables in a flexible manner. It enables companies to re-evaluate their assets at market value instead of book value and display and classify them in the financial statements to reflect the true results of the company’s business and performance, and other amendments that would integrate with the Egyptian government’s efforts to provide a favorable business environment that enhances economic activity to support sustainable growth and attract investments.

Strategic partnership

In the same context, Saif Al Khawanki, Executive Director of the Center for International Private Projects, expressed his sincere appreciation for the response and interest of the Financial Regulatory Authority in dialogue and discussion with the business community to inform them of the latest developments in the non-banking financial sector in a way that helps companies expand and develop by benefiting from the ongoing reform efforts, explaining that the meeting The current meeting is the second meeting within a strategic partnership between the Authority and the Center, with the aim of strengthening communication channels with the financial and business community to support the national economy.

Climate change issue

In the same context, Ahmed Kamal, Executive Director of the Environmental Compliance Office at the Federation of Industries, said that the issue of climate change and the speed of responding to it by formulating policies, programs and executive plans to limit its consequences has become a reality that imposes itself on all trade agreements globally, and that the Financial Regulatory Authority has made great progress in establishing The first voluntary carbon market, explaining that the Federation of Industries places the issue of climate change on its list of priorities and holds periodic meetings and follow-ups to take what is necessary to contribute effectively to this file. For his part, Ayman Yassin, General Director of the Egyptian Credit and Risk Management Association, said that the meeting comes at a very important time. Given the great importance of the topics under discussion, which are the voluntary carbon market and the development of the provisions of Egyptian accounting standards, which are topics that would support the government’s efforts to improve the business environment and support economic activity, especially the private sector.

What are accounting standards?

Mr. Mohamed Yahya, accounting and auditing expert, advisor to the Chairman of the Financial Supervisory Authority, gave a presentation in which he narrated and explained what accounting standards are and their importance for financial statements and reports and for companies, highlighting the most important developments that have occurred in them, stressing that they keep pace with all international standards and approaches, explaining that accounting standards The Egyptian Company helps companies express their financial position and business results in a sound manner, which supports the soundness of their position in making sound financing and investment decisions, indicating that the past period witnessed a comprehensive development of the provisions of Egyptian accounting standards, starting with evaluating assets at fair value instead of bookkeeping, real estate investment, and property rights.

Effects of changes in exchange rates

Dr. Farid stated that the Financial Supervision Authority always works to achieve impact and add value to the Egyptian economy and society through its decisions, enabling individuals to benefit from non-banking financial services and helping them achieve their goals.

Farid pointed out that the development of Egyptian Accounting Standard No. 13 is specific to the effects of changes in foreign exchange rates, in order to comply with international standards, as the Council of Ministers issued International Accounting Standards (IASB) on August 15, 2023, amendments to International Accounting Standard (21) “Effects of Changes.” “In foreign currency exchange rates,” which requires establishments to provide more useful information in their financial statements about the exchange rate in which they deal commercially, and the amendments to the international standard required establishments to estimate foreign currency exchange rates as well as the disclosure requirements related to that.

The decision of the Prime Minister included the addition of an accounting interpretation for the first time in the history of Egypt and the region, which regulates the accounting treatment for carbon emissions reduction certificates, and which specified the scope of the accounting treatment and the procedures that the administration must take when determining the appropriate accounting treatment, which includes a sound understanding of the accounting cycle. Issuing carbon certificates, the nature of the arrangement and the business purpose of issuing or purchasing the certificate, as well as determining the classification of the certificate held as a financial asset or as an intangible asset according to the arrangement and business purpose.

The new accounting interpretation also regulates the determinants of accounting treatment according to different cases, such as the case of issuing a certificate in favor of the developer of the abatement project who owns it, or issuing it in favor of a developer or financier of the project but he is not the owner, or the case of purchasing a carbon certificate with the aim of using it to achieve carbon exchange by canceling it, and the last case. In the case of purchasing a reduction certificate for the purpose of trading in it.

Enabling Egyptian companies to reduce their emissions

In a related context, Dr. Ahmed Rushdi, Executive Director of the Regional Center for Sustainable Finance, at the Financial Regulatory Authority, gave a presentation on the voluntary carbon market as well as the stages of launching the market, during which he reviewed all the decisions issued by the Authority to activate the voluntary carbon market in a way that gives Egypt leadership in Africa and enables companies. Egypt is able to reduce its emissions in a manner that is consistent with international standards and approaches in order to continue its trade with the world, which has come to view the climate issue as a pivotal and crucial issue and continues to issue decisions that would prevent trade exchange for companies that do not commit to reducing their emissions.

Carbon emission certification trading market

The head of Financial Supervision stated that the legislative and executive framework for the first market for trading carbon emissions reduction certificates in Africa has been completed, giving Egypt international leadership in this sector.

He explained that the journey began with the issuance of a decision by the Prime Minister No. 4664 of 2022 regarding amending some provisions of the executive regulations of the Capital Market Law No. 95 of 1992 regarding considering carbon emissions reduction certificates as a financial instrument, followed by the formation of the Financial Regulatory Authority, the first committee to supervise and control… The carbon emission reduction units and their competencies are headed by the Chairman of the Financial Regulatory Authority, and its membership includes representatives of the Financial Regulatory Authority, representatives of the Ministry of Environment, the Stock Exchange, and members with experience in the field of carbon markets.

Criteria for registering verification and authentication bodies

Then the Authority issued a decision regulating the criteria for registering verification and certification bodies for reduction projects in the list prepared for that purpose by the Authority, to speed up the pace of procedures so that the Committee began receiving applications from entities wishing to be registered to work as verification and certification bodies. The Committee conducted interviews with them to verify their capabilities and qualifications, which resulted in registration. 3 bodies carry out verification and authentication tasks, two local and one foreign.

Dr. Farid stated that the Authority issued rules for registering and delisting carbon emission reduction certificates on Egyptian stock exchanges, as well as standards for adopting local voluntary carbon registries, which are considered electronic central filing systems that include records for issuing, registering, and tracking the sequence of ownership transfer of carbon emission reduction certificates resulting from the implementation of the reduction project according to the methodologies issued. On behalf of the bodies that set standards and methodologies, in parallel with supporting the stock exchange’s efforts to issue trading and settlement rules for voluntary carbon certificates on Egyptian stock exchanges.

Trading and settlement rules for carbon certificates will be issued in the coming weeks

He pointed out that the coming weeks will witness the issuance of trading and settlement rules for voluntary carbon certificates on stock exchanges, in cooperation with the Egyptian Stock Exchange.

This came in light of the continuous effort and constant keenness of the Financial Supervisory Authority to familiarize all non-banking financial institutions with the latest developments and developments, and to enhance mechanisms and means of communication with representatives of the various financial and business communities, with the aim of informing them of all developments and developments occurring in the non-banking financial sector and assisting them. To benefit from it.

Legislation that keeps pace with global developments

Farid stressed that the Authority is continuing to implement its strategy to spread awareness of all developments occurring in non-banking financial activities and services, explaining that all efforts undertaken for reform and development through the issuance of regulations, controls and legislation that keep pace with global developments and integrate with the government’s plans and vision are primarily aimed at The stability of markets and operating institutions, the safety of transactions, and the protection of the rights of customers, along with expanding the base of beneficiaries of non-banking financial activities and services as a way to contribute to enhancing individuals’ financial capabilities and enabling them to improve their living conditions, whether through investing in products appropriate to their incomes, insurance, or accessing and obtaining the necessary financing. To start or expand their business.