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Egypt FDI likely hit $8 bln-$8.5 bln in fiscal year just ended -minister

Comments (0) Latest Updates from Reuters

By Ehab Farouk

CAIRO (Reuters) – Egyptian Planning Minister Hala al-Saeed told Reuters on Saturday that she projected foreign direct investment in the country had reached $8 billion to $8.5 billion in the 2016-17 fiscal year which ended in June.

Speaking on the sidelines of a news conference, Saeed said the government was targeting a 20 percent increase in foreign direct investment in the 2017-18 fiscal year which started this month.

Foreign direct investment in Egypt rose 12 percent in the first nine months of the 2016-17 fiscal year to $6.6 billion compared with $5.9 billion in the same period a year earlier, the investment ministry said earlier on Saturday.

Saeed told a news conference that the economic growth rate for 2016-17 would not fall below 4 percent and for the fourth quarter of 2016-17 not below 4.5 percent.

The government had projected a growth rate of 3.8-4 percent for the full fiscal year 2016-17.

Saeed said she expected the initial budget deficit for 2016-17 to come in at 10.4 to 10.5 percent. The real deficit for the 2015-16 fiscal year was 12.5 percent.

 

(Reporting by Ehab Farouk; Writing by Ahmed Aboulenein; Editing by Richard Balmforth)

 

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Egypt to halt flour subsidy and cut wheat imports by up to 10 pct

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CAIRO (Reuters) – Egypt, the world’s largest wheat buyer, will stop subsidising flour for its sweeping bread subsidy programme next month in a move expected to cut wheat imports by up to 10 percent by curtailing smuggling, the supply ministry said on Wednesday.

Egypt is looking to tighten its finances as it pushes ahead with a $12 billion three-year International Monetary Fund loan programme tied to ambitious reforms such as subsidy cuts and tax increases.

Austerity-hit Egyptians faced with inflation above 30 percent have increasingly turned to the state’s cheap subsidised bread to make ends meet, increasing the country’s food subsidy bill as well as its wheat imports. In the financial year to June 30 wheat imports reached 5.58 million tonnes, up from 4.4 million the preceding year.

In an attempt to reduce waste the state will next month stop subsidising flour used by bakeries offering the cheap bread. Instead, it will restrict subsidies to the actual bread offered to consumers, Supply Ministry spokesman Mohamed Sweed said.

Subsidy card holders currently obtain each loaf of bread for 0.05 pounds, less than a tenth of the cost of production, via an electronic smart card that allocates a maximum daily ration to citizens and compensates bakeries for the production cost shortfall with every swipe.

Unscrupulous bakers have long bought up cheap subsidised flour and sold it on the black market, costing the state millions of dollars a year in squandered subsidies.

Sweed said the new measure will remove the incentive for smugglng flour, cutting down on waste and helping to save the state up to 8 billion Egyptian pounds ($447 million) from its 2017-18 food subsidy bill, which had been set at 85 billion pounds.

He said that lower flour consumption would translate directly into reduced imports.

($1 = 17.9100 Egyptian pounds)

 

(Reporting by Eric Knecht; Editing by David Goodman)

 

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Remittances from expatriate Egyptians rise by 11.1 pct since float

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CAIRO (Reuters) – Remittances from expatriate Egyptians rose by 11.1 percent between the currency float in November and the end of April, the central bank said on Sunday, with economists suggesting recent reforms have begun restoring confidence in the banking system.

Expatriate remittances from November until the end of April have reached $9.3 billion, a central bank statement said.

Egypt’s central bank floated the pound in November to unlock foreign currency inflows and crush a black market for dollars that had discouraged people from channelling foreign currency through the banking system.

“The float is encouraging transfers through official channels, now that the parallel market no longer offers a premium above the official rate,” said Hany Farahat, a senior economist at CI Capital.

The currency float is part of a $12 billion International Monetary Fund lending programme aimed at putting Egypt on the road to recovery after years of turmoil that drove foreign investors and tourists away.

The three-year IMF programme also includes subsidy cuts intended to narrow the budget deficit and the removal of strict restrictions on bank transactions to attract foreign investors.

 

(Reporting by Ehab Farouk; writing by Arwa Gaballa; editing by Giles Elgood, Larry King)

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Egypt’s foreign reserves rise to $31.126 billion at end-May

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CAIRO (Reuters) – Egypt’s foreign reserves jumped to $31.126 billion at the end of May from $28.641 billion at the end of April, boosted by last month’s Eurobond sale, the central bank said on Sunday.

Egypt, which has been struggling to revive its economy since a 2011 uprising, sold $3 billion of Eurobonds in May, twice as much as targeted.

That confirmed growing foreign appetite for the country’s debt as it follows through with economic reforms aimed at cutting a budget deficit and luring back investors.

In November Egypt abandoned its currency peg of 8.8 per dollar and floated the pound, which then halved in value. It also raised its key interest rates by 300 basis points, helping Egypt to clinch a $12 billion International Monetary Fund programme.

Last month, the central bank raised its key interest rates by another 200 basis points after inflation reached a three-decade high.

The moves helped the country lure back foreign investors to its treasury sales. Foreign investors in Egyptian government securities rose to 136 billion Egyptian pounds ($7.52 billion) in May from 120 billion pounds a week earlier.

Last month’s Eurobond sale, which reached Egypt’s central bank on May 31, was the second such sale this year. Egypt had earlier raised $4 billion at a Eurobond sale in January that also exceeded expectations.

The steady climb in Egypt’s foreign reserves since it floated the pound brings them closer to pre-2011 levels of around $36 billion.

 

($1 = 18.0800 Egyptian pounds)

 

(Reporting by Eric Knecht and Arwa Gaballa; Editing by Catherine Evans)

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The race to succeed to UNESCO leader Irina Bokova has started

Comments (0) Africa, Middle East

unesco-Moushira Khattab

At the end of her second mandate as head of the UNESCO, Irina Bokova will no longer occupy her position as Director-General of UNESCO in 2017. Eight years after her first nomination, will the Arab world manage to access the presidency of the United Nations body?

Since summer, rumors have gone strong, and the idea of nominating a representative from the Arab world as head of the United Nations Educational, Scientific and Cultural Organization (UNESCO) has resurfaced. No country from the Arab region has ever managed to arise their candidate to the top of this organization. Against a backdrop of anti-Semitism Egypt former Minister for culture Farouk Hosni missed the opportunity by next to nothing in 2009 faced with the current Director-General at the fifth round of the ballots.

In 2009, the Egyptian press and Cairo’s intellectual circles spelt out against what they identified as pressures from “Jewish lobbies”, the United States and the polarization between the North and the South. On the same occasion, Farouk Hosni’s director of campaign condemned member states’ intention to block a cultural movement. So what? Under the pretext that European officials had been elected several times, would the UNESCO be in need of quotas established by Egyptian representatives themselves?

Moushira Kattab on the run to take the succession

Now that Egypt is reassured, it seems like it is willing to give a it go once again after the candidature for nomination of Moushira Khattab was made official on last July during a ceremony with grand apparat. Under Hosni Moubarak, Moushira Khattab was responsible for the Ministry of Family and the people from 2009 to 2011 and had no governmental role since the fall of the former President after the Arab Spring. From 2017 onwards, the diplomat – highly sensitive to children’s rights – will have to prove herself and legitimize her candidacy and that of her country.

Interviewed by Al Monitor in August 2016, Moushira Khattab was aware that there still was a long way to go. She has focused the arguments of her campaign on two major pillars to set sights on the presidency of the organization: Egypt’s legitimate demand and her past experience. On her background first: she can hardly compete with that of her competitors especially in the field of cultural affairs which she has barely dealt with along her career.  But most importantly, she bears an unforgiving burden, that of her government’s reputation and that of a country beset by many problems, in particular in terms of fundamental rights.

Egypt to head the UNESCO: still a long way to go?

Official member of the UNESCO since 1946, Egypt is nonetheless far from respecting the organisation’s premises. Freedom of the press is under threat, human rights regularly challenged and artistic freedom censored under the pretext of “religious exception”. The idea of nominating an Egyptian representative as head of a body like the UNESCO would send a rather paradoxical message. Current political and legislative affairs of the country hardly comply with both the moral values and the ideals of an organization that seeks for example to “protecting freedom of expression”, “building intercultural understanding” or even “learning to live together”, all of it put together on a bedrock of the defense of human rights. These are advocacy fields upon which shadow is cast in Egypt.

The country continues to evolve under a very restrictive vision of freedom of the press and freedom of expression. In 2015 still, Sissi’s government passed a law seeking to harshly sanction journalists who would cover terrorist attempts without strictly referring to official information released by the government. A law that not only constitute a move backwards for freedom of the media, but also applies to social media networks that are under strong scrutiny. This law was made official in a judicial report handed to the Egyptian state council in last September. Such a decision reminds repression to limit the role of social networks during the Arab spring and infringes the freedom of expression of an entire people whose liberties in the end are never really set in stone.

The announcement sparked outrage among human rights’ observers and defenders from all across the world. The candidate has not expressed her opinion about these measures, but she will certainly have to during her campaign to win the nomination to the UNESCO.

 

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Egypt’s telecom regulator approves revised terms for 4G licences

Comments (0) Business, Latest Updates from Reuters, Middle East

CAIRO (Reuters) – Egypt’s telecoms regulator has approved revised terms for 4G mobile broadband network licences, and said it will send them out to operators on Sunday.

The government offered four 4G telecom licences in June, to Telecom Egypt and to the country’s three mobile services providers – Orange Egypt, Vodafone Egypt and Etisalat – but only Telecom Egypt accepted the terms. The regulator, keen to prioritise existing carriers, decided to revise them.

A senior official at the Telecommunications Ministry told Reuters on Wednesday that the revised terms include additional frequencies but there is no change in the pricing or the condition that 50 percent of the payment for the licences must be made in U.S. dollars.

“The telecom regulator approved the final terms of the 4G licences yesterday,” the official said, adding that companies would have until midday on Sept. 22 to accept them.

The National Telecom Regulatory Authority later issued a statement confirming it approved the final terms and that the companies had until Sept. 22 to accept.

The government, which is grappling with a shortage of hard currency as economic and political turmoil in Egypt in the past few years has deterred foreign investment, has said it hopes to raise 22.3 billion Egyptian pounds ($2.5 bln) in total in licence fees.

 

(Reporting by Ehab Farouk; Writing by Ola Noureldin; Editing by Greg Mahlich and Susan Fenton)

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A new capital for Egpyt

Comments (0) Business, Featured, Middle East

Egypt's new capital city (plan)

The Middle Eastern nation builds a new capital near Cairo as it seeks to boost its economy and house a growing population.

Egypt is moving forward with plans to build a massive $45 billion new city east of Cairo that will function as the nation’s government and business capital.

Planners said the new city, which does not yet have a name, would be home to 2,000 schools and colleges, 600 health care facilities, a central business district with hotels, shopping centers and offices, and 20 residential districts with housing for at least five million residents.

Covering more than 250 square miles, or an area slightly larger than the City of Chicago, the new city will also have an international airport larger than London’s Heathrow, an amusement park four times the size of Disneyland and a public park larger than Central Park in New York City.

The plan for a new city is a centerpiece in President Abdel Fattah Al Sisi’s efforts to boost Egypt’s struggling economy. Sisi, who seized power three years ago in a bloody military coup, has proposed several mega-developments amid a slowing of tourism and direct foreign investment in the Mideast nation.

Cairo’s population will double

Planners say the project will create more than one million jobs and take about 12 years to complete.

Egyptian Housing Minister Mostafa Madbouly said one goal of the development was to ease congestion and crowding in Cairo. The city of 18 million is expected double in 40 years.

The Egyptian parliament and its government departments and ministries, as well as foreign embassies, would move to the new city, he said.

“We are talking about a world capital,” Modbouly said.

China aids development

Model for new proposed airport

Model for new proposed airport

The project got a boost earlier this year when Chinese President Xi Jinping visited Cairo to boost economic ties and announced the Asian nation’s willingness to support construction of the new city. China agreed to support the new capital project with loans, grants and other support that state media reported were worth $15 billion.

China also agreed to loan Egypt’s central bank $1 billion to increase its reserves, which stand at $16 billion, less than half the reserve at the time of the ouster of former President Hosni Mubarak during Arab Spring in 2011.

The new city is a showpiece for China’s “One Belt One Road” strategy to strengthen the country’s global position with foreign aid and investment. The strategy has prompted China State Construction to accelerate its international contracting work, building apartment houses, stadiums, roads and hotels in Africa and the Middle East.

Construction began in April

The first phase of construction of the new capital city began in April, including development of roads and communications and sanitation infrastructure on the desert site 30 miles east of Cairo.

An Egyptian-Chinese partnership that includes Arab Contractors, the Petroleum Projects and Technical Consultations Company and the China State Construction is working on the initial construction.

Modbouly said the country would also be seeking bids from private companies for portions of the first phase. Chinese companies will provide financing for the construction of a number of new buildings, including 14 government buildings and a large conference center. Estimated cost of the initial phase is $2.7 billion.

According to China State Construction, the initial phase will include a parliament building, a national meeting center, exhibition halls and offices.

Prior to Chinese involvement, the development bogged down last year over disagreements about costs and how long it would take to complete the new capital. A United Arab Emirates company that had been announced as the lead developer pulled out as Egypt cancelled its contract citing “lack of progress.”

According to The Wall Street Journal, some experts are skeptical of the project.

“Egypt needs a new capital like a hole in the head,” said David Sims, an economist and urban planner who has studied development in Egypt.

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Egypt says close to securing 3-year IMF loan programme

Comments (0) Business, Latest Updates from Reuters, Middle East

CAIRO (Reuters) – Egypt said on Tuesday it was close to agreeing an International Monetary Fund (IMF) lending programme to ease its funding gap and restore market stability and was seeking to secure $7 billion annually over three years.

Prime Minister Sherif Ismail ordered the central bank governor and minister of finance to complete negotiations for the programme with an IMF team that will visit Egypt in the next few days, the cabinet said in a statement.

“We are resorting to the IMF because the budget deficit is very high, between 11 and 13 percent within the past six years,” finance minister Amr el-Garhy, said in a phone interview with presenter Lamis El-Hadeedi on a private TV channel late on Tuesday.

In Washington, the IMF welcomed Egypt’s request for financial support and said it would send a mission to Egypt for about two weeks from July 30.

The cabinet statement, after a five-hour meeting, was the first official confirmation that talks with the IMF were under way. The statement said talks had been ongoing for three months.

“The prime minister stressed the need to cooperate with the IMF through the support program to enhance international confidence in the economy and attract foreign investment, and therefore achieve monetary and financial stability … targeting $7 billion annually to fund the program over three years,” the cabinet statement said.

The government is seeking $12 billion from the IMF, $4 billion a year, which will carry an interest rate of 1 or 1.5 percent, el-Garhy said. The package includes issuing $2-3 billion in international bonds which will be offered as soon as possible, between September and October, he added.

Economists welcomed the news, which came after a turbulent few weeks for Egypt’s currency, the pound, which has plummeted to new lows on the black market as confusion mounted over the direction of monetary policy.

“It’s great. Finally,” said Hany Genena, head of research at Beltone Securities Brokerage. “Confidence will be restored in the government and central bank. Secondly, we will see flotation of the pound, if not tomorrow, next week, the week after.”

Genena said he expected the Cairo stock market to surge after the news and for the currency to strengthen on the black market. The black market had already strengthened slightly from lows near 13 to the dollar on Monday.

Two black market traders contacted by Reuters said they were selling dollars at about 12.80 to 12.85 pounds after the IMF deal was announced.

“I think the stock index will hit 8,000 in the next couple of days,” Genena added. The benchmark EGX30 <.EGX30> closed up 0.3 percent at 7,540 on Tuesday.

Egypt’s economy has been struggling since a mass uprising in 2011 ushered in political instability that drove away tourists and foreign investors, both major earners of foreign currency. Reserves have halved to about $17.5 billion since then.

The dollar shortage has forced Egypt to introduce capital controls that have hit trade and growth, while the value of the Egyptian pound has plummeted on the black market in recent weeks as expectations of a second devaluation this year mount.

The government has pushed ahead with its reform programme, including plans for a value added tax (VAT) and subsidy cuts that were put on hold when global oil prices dropped.

A VAT bill is in its final stages of preparation but has faced resistance in parliament due to concerns over inflation, which has touched seven-year highs since the currency was devalued by 13 percent in March.

Egypt’s ambitious home-grown fiscal reform programme formed the basis of a $3 billion three-year loan deal with the World Bank that was signed in December. But the cash has yet to be disbursed since the World Bank is waiting for parliament to ratify economic reforms including VAT.

A cabinet minister told Reuters last month that Egypt had started negotiations with the IMF and that the central bank was leading the talks.

A statement released by Capital Economics, an independent economic research company, also welcomed the news.

“If approved, this would help to plug Egypt’s external financing requirement and improve the economy’s growth prospects,” it said. “This would make a sizeable dent in Egypt’s gross external financing requirement, which we estimate to be around $25 billion over the coming year.”

 

(Reporting by Amina Ismail and Lin Noueihed; Additional reporting by David Lawder in Washington; Writing by Lin Noueihed; Editing by Tom Heneghan and James Dalgleish)

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After six months, Egypt finally settles wheat fungus row

Comments (0) Business, Latest Updates from Reuters, Middle East

ABU DHABI (Reuters) – Egypt’s agricultural quarantine authority settled a months-long dispute on Monday over wheat import specifications that have hampered the country’s massive state purchasing programme ahead of an anticipated new buying season.

Egyptian quarantine authorities’ earlier refusal to let in wheat infected with even the slightest amount of ergot, a fungus that can lead to hallucinations and irrational behaviour in large quantities but at trace levels is deemed harmless to humans, wreaked havoc in the market for supplying the world’s largest wheat buyer.

The quarantine authority said a new ministerial decree would allow it to accept imported wheat shipments containing up to 0.05 percent ergot, finally ending a long-standing zero tolerance policy that has puzzled global trade.

“A ministerial decision was taken and 0.05 percent ergot tolerance will now be endorsed,” Ibrahim Imbaby, head of the quarantine authority told Reuters by phone.

Imbaby did not give more details.

The decision comes a day after the country appointed a new head for its state wheat-importing body — one of the most influential positions in the global wheat market, ahead of the impending import season set to start this month.

The resolution to the ergot row also comes as Egypt’s domestic wheat purchases are being questioned and the earlier announced 5 million-tonne Egyptian wheat procurement figure for the season could be revised, leading to a greater import need.

The country is in the middle of a government-led recount of locally purchased wheat after the unusually high local procurement figure of 5 million tonnes, as opposed to around 3.5 million tonnes in earlier years, prompted allegations of fraud from industry officials, traders and lawmakers.

If the local purchase numbers were misrepresented Egypt might have to buy more foreign wheat to meet domestic demand while contending with a dollar shortage that has already sapped the country’s ability to import, making a resolution to the ergot squabble ever more pressing.

The quarantine’s zero tolerance policy was at odds with the more commonly accepted international standard of up to 0.05 percent already endorsed by the ministry of supplies and state grain buyer, the General Authority for Supply Commodities (GASC).

“The ministerial decree was issued after a committee in the import and export surveillance authority was formed and pressurised the agriculture ministry to issue a new decree,” one Cairo-based trader said.

The affair, which resulted in several shipments of wheat turned away at ports, a sharply lower participation at GASC tenders and higher wheat prices, was thought to be finally nearing a resolution when Prime Minister Sherif Ismail intervened in late June and said the country would adhere to the common 0.05 level.

His comments were expected to be followed by a decree changing the old regulations that governed agricultural quarantines and stipulated a zero tolerance policy.

But a decree failed to materialise until Monday’s decision and the agriculture ministry has told Reuters it had been hampered by a months-old judicial order from the prosecutor general that had banned all ergot from entering the country.

The order had followed the rejection of a French wheat shipment belonging to trading firm Bunge late last year. The firm subsequently filed a lawsuit contesting the decision.

Imbaby did not make clear how that legal hurdle had been overcome.

And after months of conflicting statements from various Egyptian agencies, some European traders remain skeptical.

“We are being cautious….they’ve changed their position so many times over ergot,” one European trader said.

 

(By Maha El Dahan. Additional reporting by Gus Trompiz in Paris; Editing by Veronica Brown and Greg Mahlich)

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Egypt’s central bank says no ban on using debit cards abroad

Comments (0) Business, Latest Updates from Reuters, Middle East

CAIRO (Reuters) – Debit cards linked to Egyptian pound bank accounts can be used outside the country in a “regular” way, the central bank said on Thursday, after instructions it sent to banks on Wednesday appeared to ban customers from using them abroad.

Although Wednesday’s letter suggested a blanket ban, the central bank said its instructions “only apply to individuals misusing debit cards to acquire large amounts of foreign currency without a clear reason for doing so, which saps banks’ foreign reserves”.

“The Central Bank of Egypt affirms the continued use of all cards, debit or credit, under existing limits set by each bank,” it said in a statement.

In the letter sent on Wednesday and seen by Reuters, the central bank had told bank chiefs: “Please ensure that debit cards, including pre-paid cards, issued in local currency by Egyptian banks are only used within the country.”

Central bank Governor Tarek Amer had initially denied the Wednesday directive existed, telling state news agency MENA on Thursday the rules on using debit cards abroad were unchanged.

“It is up to each bank to set limits on its clients’ usage of foreign currency abroad through debit cards linked to local currency accounts, but we need vigilance because some clients use debit cards to get large dollar amounts not intended for travel, tourism, or shopping,” he said.

The bank’s later statement acknowledged the instruction had been sent but said it applied only in some cases. Wednesday’s letter did not indicate that was the case, however.

Egypt depends on imports for everything from food to fuel but has suffered from a shortage of dollars in the banking system to pay for them since a 2011 uprising drove away tourists and foreign investors, crucial sources of hard currency.

Many import businesses now rely on the black market, where they can get hard currency for a higher price. The pound’s rate on the black market has weakened since the central bank devalued the Egyptian pound in March, at which time it was roughly in line with the official rate.

 

(By Ehab Farouk and Ahmed Aboulenein. Additional reporting by Mostafa Hashem; Writing by Ahmed Aboulenein; Editing by Catherine Evans)

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