Egypt Independent: Economy-Main news en Egypt central bank seen keeping rates on hold amid nascent recovery <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><p>&nbsp;Egypt&#39;s central bank is expected to keep interest rates on hold on Thursday as inflationary pressure continues to ease and policymakers seek to avoid stifling a nascent economic recovery in the most populous Arab nation.</p><p>The economy has been in turmoil since a popular uprising ousted autocrat Hosni Mubarak in 2011, deterring tourists and foreign investors and straining the country&#39;s finances.</p><p>To help bring down its swelling budget deficit, the government in July slashed fuel subsidies, raising energy costs for companies and consumers by up to 78 percent.</p><p>That pushed up prices and hit business activity in July. But the effect appears to have been short-lived, with the pace of economic activity picking up in the three months since and core inflation continuing to ease in October.</p><p>Four economists surveyed by Reuters forecast that the central bank would keep its overnight rates unchanged at 10.25 percent for lending and 9.25 percent for deposits at its policy-setting meeting on Thursday.</p><p>&quot;The (central bank) will be wary of snuffing out the economic recovery,&quot; Capital Economics said in a research note.</p><p>&quot;Buoyed by a return to political stability and signs that the government is embarking on reforms, foreign investors are already returning to the country,&quot; the note said.</p><p>A fifth economist surveyed by Reuters predicted that the central bank would raise both rates by 0.25 percent.</p><p>&quot;One of the tactics the central bank will follow is to increase the interest rate to defend the Egyptian pound,&quot; said Eman Negm, an economist at Prime Holding.</p><p>Egypt&#39;s currency fluctuated on the black market last week due to a surge in commercial demand for dollars and concerns over Egypt&#39;s plans to repay a $2.5 billion Qatari deposit.</p><p>The volatility followed an announcement earlier this month by the central bank governor that he would eliminate the black market within six to 12 months.</p> Wed, 26 Nov 2014 06:23:00 +0000 Reuters 2440480 at sites/default/files/photo/2014/01/27/484151/2013-03-06t142504z_329992155_gm1e9361q0501_rtrmadp_3_egypt-sukuk.jpg EFG-Hermes: Low oil prices to boost disinflation, subsidy reforms in Egypt‏ <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><div>EFG-Hermes expects a new era of depressed oil prices and a stuctural shift in global supply and demand balances, according to a report it released on Tuesday.</div><div>&nbsp;</div><div>The new shift would assist central government budgets from countries like Egypt and help boosting disinflation and subsidy reforms, Egypt&#39;s largest investment bank said in the report.</div><div>&nbsp;</div><div>&quot;Egypt and other oil importers will benefit from lower oil prices,&quot; the report said.</div><div>&nbsp;</div><div>&quot;Immediately, these countries will realize notable savings on stretched twin deficits. We forecast cumulative savings at the level of trade deficit of US$10 billion for the above countries at a $70/bbl oil price,&quot; EFG explained.</div><div>&nbsp;</div><div>A &ldquo;new normal&rdquo; oil price has become a widely used expression by several market participants recently, reflecting expectations of a new era of depressed prices and a structural shift in global supply and demand balances, according to the report.&nbsp;</div><div>&nbsp;</div><div>The central government budgets of Egypt, Morocco and Lebanon are likely to be impacted positively, it added.</div><div>&nbsp;</div><div>&quot;We note that for Jordan, savings are likely to be $1.1,&quot; it said</div><div>&nbsp;</div><div>&quot;Lower oil prices would create complacency in these countries regarding continued subsidy reforms. We assess that those countries, mostly notably Egypt, cannot afford to delay reforms as fuel subsidies remain a major source of the structural imbalances that are keeping these economies from restoring macro stability,&quot; the report said.</div><div>&nbsp;</div><div>Fiscal balances will also benefit from lower oil prices, with Egypt and Morocco to benefit the most.</div><div>&nbsp;</div><div>One of the supposed benefits of lower oil prices is disinflation, and the gains that could bring for consumers, said the report.</div><div>&nbsp;</div><div>The list of structural reforms is still lengthy for Egypt, Morocco and Jordan, the report noted.</div><div>&nbsp;</div><div>EFG-Hermes said governments may be tempted to postpone fuel subsidy cuts because of low oil prices, but not tax reforms. &quot;In Egypt, the government recently approved a real estate tax and a 5 percent additional income tax on high-income earners. It is also set to introduce a value-added tax which we expect would add 1.5 to 2.0 percentage point to headline inflation,&quot; said the report.</div><div>&nbsp;</div><div>EFG assumes that Gulf Cooperation Council financial support will continue in 2015. GCC&#39;s grants to Egypt recorded LE96 billion during the year of study compared to LE 5.2 billion during 2012/2013, according to the Finance&nbsp;Ministry.</div><div>&nbsp;</div><div>This includes LE21 billion ($3 billion) in cash grants received from the UAE and Saudi Arabia, and around LE53 billion in‐kind grant in the form of petroleum products received from some Gulf states, as well as around LE20 billion.</div><div>&nbsp;</div> Tue, 25 Nov 2014 18:06:00 +0000 Mai Mohsen 2440456 at sites/default/files/photo/2014/10/19/484151/saudi_gas.jpg Al-Futtaim to invest $700 mn in Egypt after dispute settled <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><div>Dubai-based conglomerate Al-Futtaim Group said on Tuesday it would invest US$700 million in Egypt over three years and pay the government $30.5 million as part of a settlement reached last week over a long-standing land sale dispute.</div><div>&nbsp;</div><div>Mohamed al-Makkawi, Al-Futtaim&#39;s Egypt CEO, told reporters the investments would be directed towards new projects in a second phase of the company&#39;s Cairo Festival City development, including a hotel and nearly 500 housing units.</div><div>&nbsp;</div><div>Makkawi also said Al-Futtaim had agreed to pay $30.5 million (LE217.9 million) within 90 days as part of a settlement announced on Wednesday by the government.</div><div>&nbsp;</div><div>Egypt is seeking to clear a backlog of such disputes to help win back foreign investors spooked by political and economic turmoil since the 2011 uprising.</div><div>&nbsp;</div><div>&quot;We have not been issued any building permits since 2010,&quot; Makkawi said. &quot;But after signing the contract amendment, we will now be issued building permits.&quot;</div><div>&nbsp;</div><div>Al-Futtaim began work on Cairo Festival City in 2008, building a shopping center, two hotels, schools, clinics and residences on a 3 million square meter (32 million square feet) area. The company aims to increase the number of shops in the development to 300 in the first half of 2015 from 200 currently.</div><div>&nbsp;</div><div>Makkawi said the settlement and the investments would be funded mostly from the company&#39;s existing resources.</div> Tue, 25 Nov 2014 17:01:00 +0000 Reuters 2440472 at sites/default/files/photo/2014/11/25/484151/al-futtaim1.png Egypt's stock market gained LE2.8 billion on Tuesday, while EGX30 drop 0.48% <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><div>The Egyptian stock exchange closed on a negative note for the second consecutive session, while EGX market capital gained LE2.8 billion to hit LE516.1 billion compared to LE 513.3.4 billion on Sunday.</div><div>&nbsp;</div><div>The market&#39;s main index EGX30 dipped 0.48 percent to 9,112.69 points in a total turnover of LE698 million.</div><div>&nbsp;</div><div>Meanwhile, the broader index EGX70 was up 0.87 percent and EGX100 rose 0.44 percent.</div><div>&nbsp;</div><div>Foreign and Arab institutions were net buyers, recording a net flow of LE43.32 million and LE3.16 million respectively, as opposed to local institutions that closed as net sellers recording a net flow of LE30.79 million.</div> Tue, 25 Nov 2014 15:47:00 +0000 Egypt Independent 2440469 at sites/default/files/photo/2013/12/26/484151/__sqwt_mwshr_blbwrs_lmy_tswyr_mhmd_mrwf_4_536.jpeg