U.S. ADDS EGYPT’S POTATOES & SPINACH TO GSP PROGRAM Source: AFP, July 5, 2009
Washington has approved Egypt's request to add frozen uncooked potatoes and frozen spinach to the list of products under the Generalized System of Preferences (GSP) program.
The GSP Program in 2008 facilitated $31.7 billion in imports of nearly 5,000 types of products from 131 developing countries, the Office of the United States Trade Representative (USTR) (link here) said.
The administration also removed 12 products from six countries benefiting under a duty free export program for developing economies. The products included preserved mackerel from Thailand, certain aromatic and non-aromatic drugs, zinc tubes or pipes and auto parts from India, a form of polyethylene from Indonesia and railway parts from Ukraine. The 12 products from six beneficiary countries are now sufficiently competitive in the U.S. market to no longer need GSP treatment, USTR said.
The United States will also issue waivers that will prevent 112 export items from 16 beneficiary countries from being excluded from the program because they exceed statutory import ceilings officials said.
EGYPT TO FINANCE BUDGET DEFICIT THROUGH DOMESTIC BORROWING Source: Reuters, July 3, 2009
Egypt expects to finance its increasing budget deficit through domestic borrowing rather than issuing foreign bonds, Finance Minister Youssef Boutros-Ghali said.
Egypt’s budget for 2009/10, starting July 1st, forecasts a deficit of LE98.9 billion ($17.7 billion), equivalent to about 8.4 percent of forecast Gross Domestic Product (GDP). The deficit was expected to be 6.9 percent in 2008/09.
BROAD MONEY SUPPLY GROWTH JUMPS TO 8.5% Y-O-Y IN MAY 2009 Source: Beltone News, July 2, 2009
Broad money supply (M2) growth jumped to 8.5% y-o-y in May 2009, after stabilising at 6.9% and 6.8% in March and April, on the back of higher y-o-y growth in deposits in foreign and local currencies, according to Central Bank of Egypt (CBE) (link here). M2 y-o-y growth had peaked at 23.9% in March 2008, as foreign and local investments increased in the economy. With the monetary tightening and decline in capital inflows throughout 2008, M2 growth dropped, registering a historic low in March 2009, based on time series data from 1996.
Domestic credit growth inched up to 16.4% in May, from 16.1% in April, due to higher growth in claims on the government, which registered y-o-y growth of
32.2% in May, compared to 31.1% in April, as the government continued to expand in debt to finance its spending. Growth in credit to the private sector rose slightly to 5.3% in May, from 4.2% in March, and 5.1% in April 2009, falling from 10.8% in September 2008.
Growth in credit to the household sector continued its drop, registering 13.5% in May, compared to 18% in April and a peak of 31.2% in August 2008. Growth in credit had been declining in both the private and household sectors as expected, due to the slower domestic and global growth and due to the restrictions placed by banks on lending to the household sector to avoid deterioration in loan quality. Growth in credit to the private sector has shown some resilience, in the past few months, however, with detailed data on the breakdown of credit showing the drop in credit was mainly in foreign currency loans, while loans in local currency remained relatively stable, especially to trade and industry.
Growth in local currency deposits continued to decline, registering 6.3% in May 2009, falling from a peak of 27.7% in March 2008, mainly due to the decline in deposits from the private sector and demand deposits from the household sector. Growth in time deposits from the household sector had risen from 7.7% in May 2008 to 17% in March 2009, before declining to 16.7% in May, possibly in reaction to the monetary loosening cycle which started in February 2009, with the CBE cutting interest four times, to date.
EGYPT SUEZ CANAL REVENUES DROP 26 % YEAR-ON-YEAR IN JUNE Source: Arab Finance, July 9, 2009
Egypt's Suez Canal revenues dipped 26 percent to $348.2 million in June, compared to $471.4 million in the same month last year, a Suez Canal Authority official said. The figure was the highest monthly receipts from the canal this year. The canal is one of Egypt's main foreign currency earners, along with tourism, oil and gas exports and remittances from Egyptians living abroad. The number of vessels using the waterway was 1,401 in June, down from 1,819 in June 2008.
INFLATION INCHES DOWN TO 10% Y-O-Y IN JUNE Source: EFG-Hermes, July 9, 2009
Egypt's urban consumer inflation inched down to 10% Y-o-Y in June from 10.2% in May as food prices continued to rise M-o-M, according to CAPMAS. Average inflation for FY2008/09, which ended on June 30, reached 16.5% Y-o-Y. Food prices continued to rise M-o-M, albeit at a lower 0.5% M-o-M compared to an average 2.5% M-o-M since February. Meanwhile, non-food inflation dipped to 8.2% Y-o-Y from 8.3% in May as non-food items in the CPI basket remained unchanged M-o-M except for a 4.6% M-o-M increase in recreation and culture, 3.3% of the basket. No detailed breakdown was released yet.
Inflation has fallen from a peak of 23.6% Y-o-Y in August, but much more slowly than we expected thanks to an 11% YTD increase in food prices. The fall in inflation Y-o-Y has mainly been the result of base effects rather than actual falls in prices. The Y-o-Y drop in inflation and lower non-food inflation have allowed the Central Bank of Egypt (CBE) (link here) to reduce overnight deposit rates by 250 bps and overnight lending rates by 300 bps in 2009, most recently in parallel 50 bps cut at its last meeting on June 18.
EGYPT TO SET UP DERIVATIVES EXCHANGE IN 2011 Source: Reuters, July 6, 2009
Egypt aims to set up an exchange for derivatives in 2011, pushed back from a planned start at the end of 2009 because the world financial crisis drove down trading. The exchange was likely to start with futures trading linked to main index, and trading in other instruments such as swaps and options would be considered later, said Mohamed Omran, deputy chairman of the Egyptian Exchange (EGX) (AmCham member) (link here).
The number of companies listed on the Egyptian bourse is expected to decline this year as companies that are not actively traded are delisted. "I would not be surprised if we have less than 250 companies by the beginning of 2010 compared to the current 333", said Omran.
MENA EQUITY MARKETS RETREAT 2 PERCENT IN JUNE Source: Al-Bawaba, July 8, 2009
Equity markets in the Middle East and North Africa retreated 2 percent in June, bringing down their gains to 12.6 percent in the first half of 2009. The UAE, Saudi Arabia, Qatar, Kuwait and Egypt markets recorded losses while the Omani and Lebanese markets saw positive performances. The Egyptian market lost 3.8 percent in June and is now the second best performing Arab market after Tunisia (7.8 percent gain) in the first half of 2009.
The Egyptian stock market remains cheap relative to emerging market peers and provides a good entry point for foreigners. A possible catalyst for the market in the short-term is a return of foreign buying. A market rebound will also be supported by falling deposit rates and more possible rate cuts by the Central Bank of Egypt (CBE) (link here) in 2009.
BANQUE MISR TO FINANCE AIRPORT HOTEL Source: Noozz, July 8, 2009
Banque Misr (AmCham member) (link here) will provide a LE250 million loan to Cairo Airport Company to finance the construction of a five-star hotel at Cairo International Airport (link here). The bank agreed with the company on a maturity of 10 years and a grace period of two and a half years. The company will start construction by the end of 2009 and the hotel construction is expected to be completed in two and a half years.
CIB APPROVES LE500 MILLION LOAN FOR PALM HILLS Source: Al-Alam Al-Yom, July 6, 2009
Commercial International Bank (CIB) (AmCham member) (link here) agreed to a 5-year syndicated loan worth LE500 million ($90 million) for Palm Hills Developments (AmCham member) (link here).
CIB is in negotiations with other banks to participate in the loan including Arab African International Bank (AmCham member) (link here), Bank of Alexandria (AmCham member) (link here) and HSBC (AmCham member) (link here).
Palm Hills received a loan worth LE500 million last year from five banks to rework its financial structure and finance its projects on the North Coast and in Al Katameya in Eastern Cairo. It also obtained a LE200 million loan to finance the construction of its first mall, which will be located in New Cairo.
Palm Hills has 22 projects, including Village Gardens Katameya located in New Cairo, Palm Hills and Village Gardens in Sixth of October City and Palm Hills Botanica located on Cairo-Alexandria desert road.
MISR INSURANCE COMPANY TO LAUNCH IPO OF ITS LIFE UNIT BY JULY 2010 Source: Beltone News, July 7, 2009
Egypt's state-owned Misr Insurance Company (link here) may launch an Initial Public Offering of its life unit by July 2010, if conditions permit, but the state will keep a majority stake, said the Chairman of the Insurance Holding Company, Mahmoud Abdallah.
A stake lower than 51% would be offered in the life unit of Misr Insurance Co, maintaining majority ownership for the holding company. "The (stake) depends on the market appetite, but we have no intention, at this stage, to lose control”, Abdallah said. The first move would be to split Misr Insurance Co to separate the life insurance unit from the non-life insurance operations before the end of FY2009/2010, in accordance with the new insurance law that was issued last year.
TMG TO BEGIN DEVELOPING SAUDI PROJECT Source: Daily News Egypt, July 2, 2009
Talaat Moustafa Group holding (TMG) (link here) said that construction on its Saudi Arabia project, Nasamat El Riyadh will begin in October 2009. Nasamat El Riyadh, which is worth 6 billion riyals co-owned by TMG and Al Oula Development Company, will be established over an area of 3 million square meters and will be implemented in three phases over a period of five years. TMG finalized an agreement with Riyad Bank (link here) to provide 1.4 billion riyals. The company also plans to increase its total area of investment in Saudi Arabia to 15 million square meters as part of the company’s strategy to enhance geographic diversification.
UPPER EGYPT CONTRACTING TO EXPLOIT BENI SUEF GIANT QUARRY Source: Arab Finance, July 12, 2009
Mokhtar Al Dahshouri, chairman of Upper Egypt Contracting (UEGC), said that his company has concluded all procedures of the contract for exploiting Beni Suef giant quarry to produce sandstones and sands.
Quarry sales are expected to exceed LE20 million annually while its daily production capacity is expected to hit 5000 meters, which in turn will improve company financial results the period ahead. The company contracted LE11 million mixing stations, excavators and loaders to be used in the quarry.
Al Dahshouri noted that the joint venture project with Abrag Misr Al Mahrousa company topped company real estate investments. Moreover, the company is aiming through the project to establish 42 residential towers with investment cost of LE1 billion and targeted revenue of LE2 billion, improvement percentage to hit 100%.
EGYPT TO CONSIDER BUILDING ASWAN-SUDAN RAIL LINK Source: Reuters, July 9, 2009
Egypt is considering building a $500 million rail link from the southern city of Aswan to a north Sudanese border town, in a move that would connect the two countries' rail networks. The line would connect Aswan to Wadi Halfa on the Sudanese border and would pass through the Egyptian town of Abu Simbel.
MARIDIVE TO SIGN OIL PIPELINE ACCORDS IN RUSSIA & INDIA Source: Bloomberg, July 2, 2009
Maridive & Oil Services SAE (AmCham member) (link here), an Egyptian marine and oil support service company, said its units Valentine Maritime and Maridive Offshore Projects may sign contracts to build pipelines in Russia and India in four months. Maridive, which offers services in Indonesia and Malaysia, has also bid for a contract in Nigeria, Chairman Issa Eleish said.
Revenue from new vessels and contracts as well as cost cuts are expected to help the company offset the impact of the global financial crisis, Eleish said. Full-year profit is expected to be around $100 million, a slight change from last year. Maridive generates more than 80 percent of its revenue outside Egypt, by providing offshore construction services and support vessels.
The company may consider offering shares of Maridive Offshore Projects on the Egyptian Exchange (EGX) (AmCham member) (link here) when oil prices stabilize between $75 and $80 a barrel, Eleish said. He expects oil prices to reach that range by the end of this year.
WORLD BANK APPROVES LE1.1 BILLION LOAN FOR WIND ENERGY PROJECTS Source: Al-Alam Al-Yom, July 8, 2009
The World Bank's (link here) Clean Technology Fund has provided a loan worth LE1.1 billion to finance: (i) the construction of a new 200 megawatt wind farm in the Gulf of Suez; (ii) the construction of electricity distribution networks to transmit electricity from the wind farms; (iii) providing financial support to cover the difference in electricity prices (from wind energy) between that offered by the Egyptian Electricity Transmission Company and the price sought by investors operating the wind farms. Egypt currently generates 405 megawatts from wind energy, with 145 additional megawatts in the pipeline, said Minister of Electricity and Energy Hassan Younes.
EGYPT'S GAS RESERVES UP AT 77.2 TRILLION CUBIC FEET IN 2008/09 Source: Reuters, July 15, 2009
Egypt's proven natural gas reserves rose to around 77.2 trillion cubic feet in the 2008/09 fiscal year, up 1.2 trillion cubic feet from the previous year's reported figure. Egypt said last year its reserves stood at 76 trillion cubic feet for fiscal 2007/08. The country's reserves of crude oil and condensates rose 220 million barrels to 4.4 billion barrels in the 2008/09 fiscal year which ended June 30.
FIVE INDUSTRIAL ZONES AT INVESTMENTS OF LE7.3 BILLION Source: Egypt State Information Service, July 5, 2009
Trade and Industry Minister Rachid Mohamed Rachid said that his ministry has launched a plan to establish five industrial zones within the second phase of the Industrial Developers project.
The five zones will house factories specialized in engineering industries, food and clothing on 5.3 million square meters of land in the 10th of Ramadan and October 6th cities at investments totaling LE7.3 billion, Rachid noted.
Rachid said the second phase of the Industrial Developers project targets the establishment of seven industrial zones over 10 million square meters that will house 825 factories in the 10th of Ramadan and October 6th cities at investments totaling LE13 billion, creating 40,000 job opportunities.
EGYPT TO RAISE RICE EXPORT DUTY 100 PERCENT Source: Al-Mal, July 5, 2009
The Ministry of Trade and Industry (link here) is planning to increase the export duty on rice by 100 percent, from LE1,000 per ton to LE2,000 per ton, citing a member of the Agricultural Council .
The ministry aims to eliminate manipulative practices by exporters, who have been trying to circumvent its decision to ban rice exports, except for quantities equivalent to those supplied to the General Authority for Supply and Commodities (GASC).
Following the decision, exporters have been competing to supply the GASC with increased quantities of rice at prices as low as LE1 per ton, to increase their chances to export rice abroad.
The ministry began banning exports of rice in April 2008, when higher food prices fuelled a spike in inflation, extending the six-month ban several times since then.
AGRICULTURAL EXPORTS INCREASE WHILE NON-OIL EXPORTS DROP Source: Al-Ahram, July 8, 2009
Egypt’s agricultural exports during the quarter ending June 2009 grew by 39 percent to reach $693 million versus $499 million during the same period last year.
Non-oil exports slumped 17 percent at $4.2 billion, down from $5 billion a year earlier. Meanwhile, exports of chemicals and fertilizers slid 45 percent posting $630 million.
BAHRAIN INVESTMENTS IN EGYPT TOP $500 MILLION Source: Daily News Egypt, July 10, 2009
The volume of Bahraini investments in Egypt has topped $500 million, which will be boosted further with new projects worth $100 million in the pipeline for the Egyptian market.
"Bahrain is the third biggest Arab investor in Egypt after Kuwait and Saudi Arabia," Bahrain Chamber of Commerce and Industry (link here) Chief Executive Officer Ibrahim Ahmed Allanjawi said.
The new investment ventures would center on the sectors of natural gas, ready-made clothes and tourism in particular. Allanjawi held talks with Egyptian Investment Authority (EIA) officials and updated them on Bahrain's business potential.
EGYPT’S TOURISM INDUSTRY IS RECOVERING FROM SLUMP Source: Arab Finance, July 15, 2009
Egypt’s tourism industry, the country’s biggest source of foreign currency, is beginning to recover from a slump caused by the global financial crisis, Tourism Minister Zoheir Garranah said.
Tourism revenue fell 9.5 percent in the first six months of 2009, an improvement from the 17 percent decline recorded in the first quarter, Garranah said. Tourist arrivals in the first week of July were higher than the same period a year earlier, he said. Tourism earned Egypt $11 billion last year. The figures announced today imply revenue of about $2.6 billion in the second quarter of 2009, similar to the year-earlier figure.
Tourist numbers fell 8.7 percent in the first half of the year from a year earlier, Garranah said. Egypt attracted a total of 12.8 million visitors in 2008. Egypt’s economy probably expanded 4.7 percent in the fiscal year that ended last month, and is expected to grow 5 percent in the coming 12 months, Finance Minister Youssef Boutros-Ghali said. Growth has slowed from an average pace of about 7 percent in the previous three years, as the world recession hurt foreign investment and revenue from the Suez Canal.
MORE THAN 4,000 NEW TAXIS Source: Al-Ahram, July 12, 2009
The Minister of Finance said the number of approved bank loans to replace old taxis has increased to 14,331 since the start of the project in April 2009 until early July of 2009. A total of 4,263 taxis have been delivered since the start of the taxi replacement project.
CAIRO HOSTS THE 4TH ANNUAL NORTH AFRICA COM CONFERENCE AND EXHIBITION Source: Daily News Egypt, July 8, 2009
Informa Telecoms and Media (link here) announced that it will host the fourth annual North Africa Com conference and exhibition on Oct. 27-28, 2009 in Cairo.
Under the theme of “Strengthening Operators’ Positions in North Africa with New Technologies & Services”, the region’s largest telecommunications event is expecting to welcome over 800 senior-level representatives from the region's mobile and fixed-line operators, internet service providers, regulators, investors, telecom solutions vendors and content providers.
“With mobile subscriptions in North Africa expected to increase to 264.5 million by 2012, this rapidly developing market is vital to telecom operators’ business growth strategies,” said Veronika Pete, Informa Telecoms and Media’s marketing executive of the Com World Series.
The conference is designed to deliver market insight, practical solutions and best-practice benchmarks to grow businesses and partnerships in countries such as Egypt, Algeria, Libya, Mauritania, Morocco, Sudan and Tunisia.
FINANCE MINISTRY TO FINALIZE NEW VALUE-ADDED TAX LAW Source: Beltone News, July 8, 2009
The Ministry of Finance (link here) finalized the new value-added tax law that will replace the existing sales tax law, and which was postponed several times due to the high inflation in 2008 and the onset of the global economic crisis, siad the Minister of Finance, Youssef Boutros Ghali.
The new law will amend the existing sales tax system, converting it into a fully-fledged VAT, while streamlining the taxation process, unifying the rates and removing irregularities in the current system. The amendments all benefit the end consumer, aiming to reduce the cost of the final product, stated the Head of the Tax Operations Unit at the Sales Tax Division.
The new law will raise the minimum rate for the tax, to LE300,000, below which industrial activities will not be taxable and will discount all services costs before calculating the tax. The Minister had indicated that the new law will be referred to Parliament in its current session, starting November 2009, at a meeting with the Federation of the Egyptian Industries (link here) and Chambers.
Compiled by: Business Studies & Analysis Center E-mail: Studies@amcham.org.eg If you want to receive this bulletin on a regular basis, fill out this form
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