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Nazif hails economic performance

Prime Minister Ahmed Nazif has touted the government’s economic reforms since 2004, which he says have created an investor-friendly climate responsible for Egypt’s economic growth. The growing economy has created a demand for better infrastructure and skilled labor, he said during last month’s Euromoney Conference in Cairo.

Other challenges for policymakers include land reform and subsidies. Nazif stressed that a better policy would target subsidies to reach the poor, rather than the whole of society. He downplayed the impact that a slowdown in the US market would have on Egypt, noting that the country’s economic diversity would help insulate it from external shocks.

Libya imposes tighter entry rules

Libya has added new restrictions on the entry of Egyptian workers. The new policy permits only those born in nearby Matrouh governorate and who already have work contracts to enter. All others will now need visas, which carry strict requirements.

Reports indicate that Egyptians have already been turned away at the Salloum border crossing, including about 600 workers who spent their summer holiday in Egypt and were returning to jobs in Libya. About one million Egyptians work in Libya, mostly performing manual labor, the labor ministry estimates.

Meanwhile, a ministerial panel met last month to discuss the situation, and to consider whether the sudden move violates the 1990 Four Freedoms Agreement signed between Egypt and Libya, which allows for citizens of the two countries to move freely across the border without visas.

The new policy comes just weeks after hundreds of Egyptian workers clashed with locals in the western Libyan town of Beni Walid. Fourteen Egyptians were arrested after the incident, which reportedly resulted from an argument between an Egyptian laborer and a local tribal member. Five Egyptians were hospitalized and later released. No Egyptians were deported as a result of the dispute, according to Egypt’s Ministry of Foreign Affairs.

IMF upbeat on Egypt’s economic policies

A preliminary report issued by the International Monetary Fund (IMF) gave high marks to Egypt’s economic performance in FY 2006-07, stating that recent reforms and good macroeconomic management led to high growth. The report stated that the economy continues to grow rapidly and unemployment has declined.

Strong growth combined with rising equity and real estate prices boosted inflation, the report said, though the central bank deserves credit for containing inflation by tightening monetary policy. The IMF also praised structural reforms, such as the privatization of several public enterprises, including public banks and unused land, which had helped strengthen the role of the private sector.

The task ahead for economic policymakers is to sustain high job-creating growth, the IMF advised. That requires greater investments and reforms to tackle constraints on business development. Another challenge is reducing the budget deficit, estimated at 7.5 percent of GDP, which the IMF says is the key to national saving and supporting a monetary policy capable of checking inflation and speculative inflows.

The report issues a strong outlook for 2007-08, with real GDP expected to expand by 7 percent, about the same rate as last fiscal year. Inflation is forecast between 6 and 9 percent following a volatile year in which it peaked at 12.8 percent in March 2007, reportedly due to the impact of an avian flu outbreak and adjustments to fuel subsidies. The consumer price index began falling afterwards, reaching 8 percent in July.

The report was issued by an IMF mission at the conclusion of its visit to Egypt, where it met with government and business leaders. The findings will serve as the basis for Egypt’s 2007 Article IV discussion, which IMF member countries are obliged to undergo as part of their membership commitment, to be held later this year.

Property taxes to be slashed

The government intends to revise property taxes for the lower and middle class, Minister of Finance Youssef Boutros-Ghali has announced. Property taxes will be reduced for certain socioeconomic strata and eliminated for others, depending on the value of their property. The minister said taxes on real estate would be reduced for those in the limited income and lower medium class brackets from the current 46 percent to 10 percent, while those owning units worth less than LE 300,000 would be totally exempt from the tax.

Business, tourist complex cut down to size

The Ministry of Culture has ordered the developer of a business and tourist complex under construction to reduce the building’s proposed maximum height so as not to obstruct views of the Citadel behind it.

Developer Alkan Holding unveiled plans for its 260,000-square-meter Cairo Financial and Tourist Center in February 2006, but found them mired in controversy. In July 2006, the Supreme Council of Antiquities (SCA) issued a stop order on the construction claiming that the proposed building violated Antiquities Law 117/1983 by infringing on the Citadel complex, a UNESCO World Heritage site.

Two UNESCO teams were called in to arbitrate the dispute. They recommended that the façade of the complex should match the natural hues of the surrounding rock, and that its buildings should not exceed 31.5 meters, which is the upper level of the enclosing wall of the Citadel. The original plan was for the hotel to be 47.5 meters and the office buildings 59.5 meters.

Oil ministry declares smelly fuel safe

The Ministry of Petroleum has denied recent rumors that gasoline on sale at many service stations has been mixed with alcohol or methanol. The rumors began when drivers complained of an unusual odor associated with the gasoline at several service stations in Cairo.

The ministry acknowledged that some gasoline being sold had a pungent smell, but said the incidents were limited to gasoline imported from the United Arab Emirates, which typically carries a high amount of odiferous additives. The ministry assured drivers that the gasoline did not pose any extra health risks and does not negatively affect vehicle performance.

Egypt crowned reformer king

Egypt received high marks among reforming countries for ease of doing business in “Doing Business 2008,” an annual report issued by the World Bank and International Finance Corporation. While the country finished just 126 out of 178 in terms of ease of doing business, it showed the biggest improvement in overall reform. In last year’s report, Egypt ranked 165 out of the 175 countries surveyed.

The report cited five areas in which Egypt had improved, making it easier to start a business. The minimum capital requirement was slashed from LE 50,000 to LE 1,000, while start-up time and costs were halved, the report said. Fees for registering property were reduced from 3 percent to a low fixed rate, and one-stop shops for customs were opened at ports, which cut down export time by five days and import time by seven days.

Duties scrapped on white cement

The Ministry of Trade & Industry has removed the LE 85 per ton export duty on white cement, citing sufficient output to satisfy domestic demand. Tariffs on gray cement and clinker exports remain in place.

According to Abdel Rahman Fawzi, head of the ministry’s foreign trade sector, total production of white cement reached 900,000 tons per year, while domestic consumption amounted to just 400,000 tons. The resulting surplus could be exported without any supply constriction on the local market, he said.

Luxor offers WiMax access

The southern Egyptian city of Luxor rolled out WiMax coverage last month, offering visitors a chance to connect to the Internet while touring the city’s ancient sites. Tourists who purchase prepaid cards can log on to a city-wide broadband wireless Internet service, for about LE 40 per hour.

The service, part of a USAID-funded project, is geared to the 3.5 million tourists who visit the city every year. A similar initiative has been launched in the Red Sea resort city of Sharm Al Sheikh.

The government granted the project a temporary license to install WiMax, which allows connections over longer distances than the Wi-Fi standard.

OT forms Iraqi joint venture

Orascom Telecom (OT) and Korek Telecom, a Kurdish operator, have created a $2.2 billion joint venture to operate a mobile network in Iraq. The venture is expected to have 4 million subscribers, or a 40-percent market share. Orascom holds a 70-percent stake and Korek 30 percent.

Orascom has operated in Iraq since 2003 through its subsidiary, Iraqna, through a temporary license, but dropped out of an auction held in August for three 15-year licenses to replace the temporary licenses. Korek won a license for $1.25 billion.

Iraqna will transfer 2.8 million subscribers, while Korek Telecom will add 1.2 million customers.

Culture ministry bribery scandal widens

A state official has been arrested on bribery charges in a growing scandal involving culture ministry officials taking kickbacks from construction companies vying to secure contracts for historical restoration projects. Abdel Hamid Qotb, head of the engineering department at the Supreme Council of Antiquities (SCA), was arrested and held for 15 days after an investigation by the Administrative Control Authority found that he had taken LE 600,000 in bribes from contractors.

Alarm raised over Nile pollution

Pollution in the Nile has reached alarming levels, a new study by Al Azhar University claims. The study by the university’s Faculty of Science found that 12.2 billion tons of pollutants were being pumped into the river every year. Nearly 10 percent of this is generated by a single industrial complex in Shobra Al Kheima, just north of Cairo.

The government spends approximately LE 17.5 billion annually to dispose of pollutants dumped into the Nile using filters and chemical treatment, the report said.

Textile workers back on strike

Thousands of textile workers at Misr Spinning & Weaving Company went on strike last month in the Nile Delta town of Mahalla Al Kubra. The company’s 27,000 workers were protesting unpaid bonuses and wage increases they say were promised after an earlier strike in December. State security arrested eight leaders within the first two days of the strike, but workers have vowed to continue their strike until their conditions are met.

According to the government daily Al-Akhbar, Minister of Investment Mahmoud Mohieldin agreed to divert some of the company’s profits to increase pay for the striking workers. The plan would increase the workers’ pay by the equivalent of 40 days’ wages on top of the 20 days’ wages already agreed upon. Representatives from the Syndicate of Spinning & Weaving Workers, as well as Misr Spinning & Weaving Company and its holding company, have agreed to the proposal. It remains to be seen if the workers will accept this deal.

Mobile operators told to stop overloading

The National Telecommunication Regulatory Authority (NTRA) has warned mobile companies to stop operating networks over their capacity. The NTRA says the overloading is to blame for poor quality and disruptions in service. It has warned mobile operators that if they do not stop this practice, it will prohibit them from adding new subscribers.

The NTRA also announced that it expects to introduce mobile number portability in November. Portability allows users to switch from one operator to another while retaining their existing mobile number. Mobile operators are now testing the service.

Cairo airport opened to charter flights

Cairo International Airport began receiving its first charter flights last month after amending a 1996 decree that had allowed charter flights at all airports in Egypt except Cairo. The decree had been put in place to protect the dominant market position of the national carrier, EgyptAir. The decision to abolish the ban is considered a significant step towards the Ministry of Civil Aviation’s implementation of an Open Skies policy, which allows for the liberalization of the aviation sector.

Remote sensing station to open

Egypt’s first satellite ground station is set to begin operations this month. The station, located about 50 kilometers south of Cairo, was built by a team of Egyptian and Ukrainian experts. The station is designed to control and send information to Egyptian satellite MisrSat-1, a scientific research satellite launched from Kazakhstan last March.

Mortgages more accessible to foreigners

Non-Egyptians will be allowed to take out mortgages denominated in foreign currencies, the Mortgage Finance Authority (MFA) has announced. Under new regulations issued by the MFA, foreigners can finance the purchase of residential, administrative, services or commercial units, and can make payments in the same foreign currency as the original loan.

Vodafone announces stock buy back

Vodafone Egypt (VE) has offered to buy back its outstanding shares listed on the Egyptian bourse in advance of the company’s delisting. Approximately 733,000 shares, or 0.3 percent of the company’s total shares are remaining, which VE offered to purchase at LE 97.11 per share.

Vodafone Egypt first listed on the Cairo & Alexandria Stock Exchanges (CASE) in December 2003. By changing its status from public to private, the company will no longer be required to adhere to strict rules regarding the disclosure of financial information.

Health inspectors round up rancid food

Health authorities destroyed 121 tons of food unfit for human consumption after a nationwide sweep to coincide with the Ramadan season uncovered vast quantities of low-grade and spoiled food products. Ministry of Health inspectors filed over 7,000 violation reports and suspended the operating permits of 229 institutions based on inspections of 6,500 markets, factories, hotels, shops and restaurants. Nearly 15,000 samples of various foods were sent to ministry labs, which deemed large quantities of preserved, frozen, canned foods and meats and diary products to be unfit for human consumption.

Novatek signs gas concession

Russian gas producer Novatek has acquired a 50-percent stake in an oil and gas concession near Al Arish. The second largest gas producer in Russia is partnering up with Egypt’s Tharwa Petroleum to develop the Al Arish offshore block over a minimum exploration period of four years. The 2,300-square-kilometer concession is located along the Mediterranean coast, adjacent to the north coast of Sinai.

Blood trail leaves seven behind bars

A court has ordered parliamentarian Hany Sorour and six others to remain in jail while they await a trial on charges of supplying hospitals with substandard blood bags. Sorour, an MP of the ruling National Democratic Party, is also the owner of Haidylena, a medical supplies company that was a main provider of blood bags to the Ministry of Health.

The six others include Sorour’s sister and business partner, Nivian Sorour; general manager Wafaa Abdel Rahim; production manager Ashraf Ishaq; quality control manager Fathiya Abdel Rahim; and Ministry of Health officials Helmy Salah El Din and Mohamed Shoukry. The next court hearing is set for November 11.

The controversy erupted in early January when the parliament stripped Sorour of his immunity from prosecution after a complaint was filed by a health ministry employee, alleging that the blood bags that Haidylena supplied did not meet regulation standards. A public prosecutor referred Sorour and the six others to a criminal court in June. The ministry confiscated the bags supplied by Haidylena, which were found to contain bacteria and fungi, but said none of the contaminated bags were distributed to hospitals.

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