Egypt Independent: Economy-Main news

Central Bank offers US$800 million in exceptional auction

Mohsen Abdel Razeq — Wed, 22 May 2013 16:09:00 +0000

On Wednesday, the Central Bank of Egypt conducted an US$800 million exceptional auction, its second in the last two months, to meet banks' demands for the currency they need to purchase staple commodities.

CBE Governor Hisham Ramez told Al-Masry Al-Youm that this latest auction seeks to secure funds for the purchase of basic commodities, especially with the Muslim fasting month of Ramadan approaching.

Ramez said he is unofficially attempting to contain black market and currency dealers in order to affect the market and inflation rates in a positive way. “The gap between prices in the official and unofficial markets has narrowed, and will soon be negligible,” Ramez stated, adding that the targeted commodities include foodstuff, spare parts, raw materials, medicines and related chemicals.

Egypt has seen its international currency reserves dwindle since a popular revolution ousted former leader Hosni Mubarak.

Last month, the currency reserves increased slightly to almost US$14 billion, which was widely attributed to a US$2 billion loan Egypt obtained from Libya.

Edited translation from Al-Masry Al-Youm

Egypt's EFG Hermes says Q1 net profit jumps 27 pct

Reuters — Wed, 22 May 2013 15:49:00 +0000

EFG Hermes, Egypt's biggest investment bank, saw net profit jump 27 percent in the first quarter from the same period a year earlier, the bank said on Wednesday.

Net profit for the period increased to 98 million Egyptian pounds ($14 million) from 77.0 million pounds in the first quarter of 2012, the bank said in a statement sent to the Egyptian stock exchange.

Egypt inflation set to climb to 10.9%, says IMF

Reuters — Tue, 21 May 2013 13:24:00 +0000

Inflation in Egypt is expected to climb to 10.9 percent this year, the highest level since 2010, the International Monetary Fund (IMF) said on Tuesday, more than it expected in April.

“Inflation is expected to rise in Egypt, Jordan, Morocco, and Tunisia, reflecting recent and planned subsidy cuts and, in some cases, pressure from monetization of fiscal deficits and supply shortages,” the IMF said in its regional outlook.

The fund expected Egypt’s inflation of 8.2 percent in 2013 in its half-yearly analysis of the world economy published last month.

In 2014, however, price pressures may be a bit lower than previously thought, as the IMF cut the country’s consumer price growth prediction to 11.6 percent from the 13.7 percent seen in April, the report showed.

The IMF did not change economic forecasts for other Middle East and North African oil importers and exporters in its new report, which closely follows the global outlook.

Egypt’s urban consumer inflation accelerated to 8.1 percent in the year to April, fuelled by rising food and energy prices and a struggling pound currency.

It is expected to climb further as the government pushes through tax hikes and subsidy cuts to secure a $4.8 billion loan from the IMF after two years of economic and political upheaval.

Negotiations with the IMF have stumbled repeatedly over government resistance to the austerity measures needed to get the fiscal deficit under control.

The IMF expects Egypt’s budget deficit to widen to 11.3 percent of its gross domestic product (GDP) in the fiscal year, which ends in June, from 10.7 percent in the previous year, but to narrow again to 8.7 percent in the fiscal year 2013-2014.

Egypt’s newly-appointed Investment Minister Yehya Hamed said earlier this month that the shortfall would be 11.5 percent of the GDP in the 2012-2013 year.

Official: reconciliation with Mubarak-era businessmen would attract more investment

Egypt Independent,MENA — Tue, 21 May 2013 11:26:00 +0000

Mohamed Omran, head of Egypt's stock market, described the government's decision to reach reconciliation settlements with businessmen as “important” and added that this step would encourage the flow of capital into Egypt.

Investments will restore confidence in the Egyptian economy, he said.

The government has reconciled with a number of businessmen, including Naguib Sawiris, from whom they received LE 7.1 billion. The public prosecution is also examining the possibility of a similar arrangement with Hussein Salem, a fugitive businessman, who would hand over 75 percent of his wealth.

In statements made at a conference organised by the Canadian Chamber of Commerce and titled "The future of the Egyptian economy and the stock market," Omran explained how security and political conditions affect the stock exchange. He also said that the stock market had been making gains before the 25 January revolution, despite the prevalence of corruption at that time.

Growth rates varied between six and seven percent from 2004 to 2011 and investment rates averaged US$ 45 billion. Investments increased by around US$ 13.1 billion in 2008, despite the emergence of the global economic crisis.

Omran expressed confidence in the Egyptian economy, declaring that it will survive the current crisis. He added that, with the exception of China, which has high growth rates despite a limitation on freedoms, economic studies demonstrate that there is a direct link between freedom and economic growth.

Growth rates were high before the revolution, reaching seven percent, even though freedoms were repressed and corruption was widespread. This reflected the strength of the Egyptian economy," Omran said.

However, growth rates dropped to 2.2 percent after the revolution, he said.

Investment Minister Yehia Hamed reportedly said on Sunday that the government would soon announce reconciliation settlements with some businessmen.

Safwan Thabet, the CEO of Juhayna Food Industries, told Al-Masry Al-Youm on Monday that Hamed had made his comments during a meeting with 10 Egyptian businessmen.

Thabet added that this meeting was one among many being held in the hope of alleviating Egypt’s economic crisis.

Egypt’s administration wants to reconcile with businessmen implicated in corruption cases in order to replenish its declining reserve of foreign currency.

The latest statistics from the Central Bank of Egypt estimate that the foreign currency reserve totaled $14.4 billion in April, or 60 percent less than the $36 billion figure calculated for late 2010, before the 25 January revolution that toppled President Hosni Mubarak.