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Egypt sees World Bank funds arriving soon, eyes more Saudi aid

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CAIRO (Reuters) – Egypt expects to receive a $1 billion World Bank loan approved in December once outstanding paperwork is finalised and is negotiating to secure more aid from Saudi Arabia, International Cooperation Minister Sahar Nasr said on Thursday.

Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy battered by political upheaval since the 2011 revolt and ease a dollar shortage that has crippled import activity and hampered recovery.

The first $1 billion tranche of a three-year, $3 billion loan from the World Bank to support Egypt’s budget was approved by the lender in December and was expected to arrive soon after.

But Egyptian media has questioned whether the money would come as the programme is linked to the government’s economic reform programme, including plans for value-added tax (VAT).

Egypt’s new parliament, which held its first session last month, ratified the vast majority of economic laws passed by presidential decree during the three years in which Egypt did not have a legislative house. But it has yet to ratify the government’s economic plan or the World Bank loan itself.

“We are just working on submitting the required documentation. It is nothing. We are normal. There is nothing (to say) about it,” Nasr told Reuters in a telephone interview.

“We need all the documentation, any law, any decree that we put we have to submit in English … Decrees on subsidies, laws for the establishment of industrial zones, fiscal reforms … I thought I would wait for parliament to ratify everything meanwhile.”

The World Bank told Reuters in December that the first tranche was focused on “10 prior actions for policy and institutional reforms” already implemented. The second and third tranches are linked to additional reforms the government plans.

“The whole reform programme will need to be done and not just the VAT being out. We need to have executive regulation in place and be operational,” said Nasr, an ex-World Bank official.

Nasr said a $500 million loan for budget support from the African Development Bank, part of a $1.5 billion three-year programme also signed in December, had been transferred.

Since those loans were approved Egypt has secured multi-billion-dollar aid commitments both from China and Saudi Arabia and signed major investment deals with Russia.



Egypt was in talks with Saudi Arabia to secure more aid, Nasr said, declining to give details.

Egypt was also working to iron out the details of a Saudi pledge to invest $8 billion in Egypt but Nasr said she was taking time to approve projects that were ready to go.

Egypt has previously signed preliminary deals on big-ticket investments that were later downsized or delayed.

Nasr said the government was still negotiating the details of a Saudi pledge to provide Egypt with petroleum aid over five years. Egypt signed an initial three-month deal with Riyadh to meet immediate needs while talks were ongoing.

“I wanted to make sure the three months are covered and to give myself time to make an even better deal for a five-year plan,” she said.

Egypt spends roughly $700 million a month on petroleum product imports. While it has benefited from plummeting global oil prices, a forex shortage has made it harder for import-reliant Egypt to finance shipments.

Last month, a BP tanker carrying liquefied natural gas was diverted from Egypt in what traders said was a sign that the currency crisis was jeopardising energy supplies.

BP and the government denied any payment problems and said the shipment was delayed by mutual agreement.

Nasr said the shipment was delayed because Egypt had managed to secure its needs more cheaply elsewhere.

“If we get a better deal at a better rate for this month, we will take the better rate,” she said.


(By Lin Noueihed. Editing by Michael Georgy and Alison Williams)

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Kenya aims to cut external, fiscal deficits

Comments (0) Africa, Business, Latest Updates from Reuters

NAIROBI (Reuters) – Kenya’s economy is expected to grow 6.1 percent in 2016 and the government wants to trim ballooning budget and current account deficits to steady the economy, its finance minister said on Thursday.

Kenya, East Africa’s biggest economy, set a budget deficit target of 8.7 percent for the 2015/2016 fiscal year starting July, unnerving some investors who were also uneasy about Kenya’s current account deficit, which stood at above 8 percent.

The current account deficit was fuelled by a growth of imports like oil and consumer goods which was not matched by growth in exports. The budget deficit swelled due to increased spending on infrastructure projects and local government units created in 2013.

Officials and investors say the government has to deal with the deficits to boost investor confidence and stave off instability in the currency and borrowing rates. The shilling lost 11 percent against the dollar in 2015, but faired better than most African currencies.

Finance Minister Henry Rotich said the global slump in the price of crude oil had helped the country’s current account deficit to improve due to a lower import bill.

“With the measures we are taking to cut the fiscal deficit, the twin deficits will obviously go down,” he told Reuters by phone.

“We are aiming at around 6.5 percent (current account deficit) and also getting our fiscal deficit, including grants, coming down to about 4.5 percent.”

The Treasury wants to start attaining those targets from the next fiscal year and into the medium-term, Rotich added.

He said Kenya was reviewing all government ministries’ expenditure plans for this fiscal year with a view to cutting unnecessary items and reducing borrowing.

“By the end of this month we will have known what savings we are likely to achieve from the exercise,” he said, adding the measures will be contained in a supplementary budget to be taken to parliament for approval.

Growth was expected to be 6.1 percent this year, slightly up from last year’s projection of about 5.8 percent. Rotich said growth will be driven by public investments in infrastructure, a recovery in tourism and farming.

“We are still seeing infrastructure supporting the growth. Construction remains strong. We see recovery of tourism boosting that. With the favourable weather, we see agriculture will also be strong,” he said.

The government is investing in a Chinese-built 327 billion shilling ($3.2 billion) modern railway, tarmac roads and power plants. Tourists have started to return to the country’s beaches and game reserves after key Western markets like Britain lifted travel warnings.

The warnings had been put in place after a string of attacks by al Shabaab militants from neighbouring Somalia.

Rotich said the main risks to Kenya’s growth outlook were global developments including any slowdown in the Chinese economy, the direction of the oil price and U.S. interest rates.

“The risks continue to be external developments. It has become difficult to get a full feel of forecasts for global economic developments,” he said, adding the main risk at home was any adverse weather like poor rainfall.


(By Duncan Miriri. Editing by Drazen Jorgic)

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Zambia needs measures to lower deficit, restore confidence: IMF

Comments (0) Africa, Business, Latest Updates from Reuters

LUSAKA (Reuters) – The implementation of measures to lower Zambia’s fiscal deficit will go a long way towards restoring market confidence, the International Monetary Fund said on Friday.

“The pressures on the economy have not only reflected the impact of external shocks but also the waning market confidence,” the IMF said in a statement.

“Fiscal discipline has been undermined by additional spending commitments that stand in contrast to lower-than-budgeted revenues.”


(Reporting by Chris Mfula; Writing by Stella Mapenzauswa; Editng by Joe Brock)

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