THE WEEKLY BALANCE OF PAYMENTS RECORDS A SURPLUS IN THIS ISSUE ISSUE 9 9 TH MARCH, 2017

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1 BALANCE OF PAYMENTS RECORDS A SURPLUS The Central Egypt (CBE) revealed that Egypt s Balance Of Payments (BOP) recorded a surplus of USD7 billion in Jul./Dec. 2016/17 against an overall deficit of USD 3.4 billion in the same period last year. This is mainly attributed to the notable improvement in the performance of the Capital and Financial Account, which unfolded net inflow of USD17.6 billion (against USD6.2 billion). Net Foreign Direct Investments in Egypt moved up 37.7% to around USD4.3 billion and portfolio investments recorded net inflow of USD212.9 million compared to USD1.5 billion outflow in the same period one year earlier. Net borrowing also rose 60% to around USD6 billion. Data also shows that the trade deficit declined by USD2 billion in Jul.-Dec. 2016/17 to USD17.9 billion, where exports increased by about 14.4%. In Oct./Dec. 2016, the overall BOP surplus increased to USD5.1 billion (from USD 1.9 billion in Jul./Sept. 2016). This came in the wake of the decision of the liberalization of the Egyptian Pound exchange rate in November 2016, to be quoted according to the dynamics of supply and demand. This decision had a positive impact on the BOP components during the period CBE Statement CBE Official Website IN THIS ISSUE CBE s New Definition For SMEs Exempting Imported Sugar From Tariffs Remittances Rise Annual CPI Rises New Russian Industrial Zone World Bank Delegation Visits Egypt 1

2 CBE S NEW DEFINITION FOR SMES The CBE s Board approved in its meeting on the 28 th of February a new definition for Small and Medium (SMEs), aiming at covering a larger number of companies under the SMEs initiative. The new definition includes the following changes: Micro Existing Companies (Annual Revenues) New Companies (Paid-In Capital) New Definition Old Definition New Definition Old Definition Less Than EGP1 Mn. Less Than EGP1 Mn. Less Than EGP50k Less Than EGP50k Small EGP1 Mn. - Less Than EGP50 Mn. EGP10 Mn. - Less Than EGP20 Mn. (EGP50k- EGP5 Mn.) (EGP50K - EGP3 Mn.) (EGP50k- EGP5 Mn.) (EGP 50k - EGP3 Mn.) Medium EGP50 Mn. - Less Than EGP200 Mn. EGP20 Mn. - Less Than EGP100 Mn. (EGP5 Mn. - EGP15 Mn.) (EGP3 Mn. - EGP5 Mn.) (EGP5Million- EGP10 Mn.) (EGP3 Mn. - EGP5 Mn.) The new definition eliminated the Very Small category, whose annual revenues were previously stated to be from EGP1 million to less than EGP10 million. The new definition kept the workforce volume unchanged at less than 10 workers for Micro, and less than 200 workers for Small and Medium-sized. The CBE is also launching a new initiative worth EGP10 billion to fund the working capital of medium-sized enterprises, to be directed to industrial, agribusiness and renewable energy companies, with an interest rate of 12%. Egypt s Prime Minister, Sherif Ismail, issued a decree, exempting imported raw sugar from custom tariffs during the period from the 15 th of March until the end of December Previously, Supply and Internal Trade Minister, Ali El-Meselhy, also declared that the price of unsubsidised sugar will be unified at EGP10.5 per kilogram in order to control the price disparity in the Egyptian market. 2

3 Remittances from Egyptians working abroad totaled about USD5 billion during the three months followed floating the Egyptian Pound (Nov to Jan. 2017) up from USD4.1 billion in the same period last year. January remittances amounted to about USD1.6 billion compared to USD1.3 billion in the corresponding month one year earlier, with an increase of 23%. The Central Agency for Public Mobilization and Statistics (CAPMAS) revealed that urban Consumer Price Index (CPI) jumped to 30.2% (Y/Y) in February 2017 from 28.1% in January, where food and beverage prices accelerated to 40.5% from 37.2% in the previous month. However, monthly urban CPI declined to 2.6% from 4.1%, where food and beverage prices slowed to 4.1% from 6.8% (M/M). Trade and Industry Minister, Tarek Kabil, announced that Egypt and Russia will be inking a contract to establish a Russian Industrial Zone in the Suez Gulf Area in Moscow in May Kabil met with Russia s First Deputy Minister of Industry and Trade, Gleb Nikitin, and a delegation of Russian businessmen, including the CEOs of 35 Russian companies, last week to discuss trade and economic ties between the two countries. It s worth noting that a memorandum of understanding on the zone was signed in January Egypt is in discussions to sign a free trade agreement with the Eurasian Economic Union (EAEU), which includes Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan Tarek Kabil Trade and Industry Minister Ahram Online 2 nd March 2017 Investment and International Cooperation Minister, Sahar Nasr, declared that a high-level delegation from the World Bank is scheduled to visit Egypt in the first half of March. The visit aims to review the reform policies undertaken by the Egyptian government to enhance the performance of the Egyptian economy and business environment in Egypt. The review will be published in the World Bank s Doing Business annual report, noting that Egypt rose four places in the Doing Business index for 2017, acquiring the 122 nd place among 190 countries. 2 The Egyptian government is preparing a new investment law that would include facilitating investing procedures for investors and enforcing an effective dispute resolution method Sahar Nasr Investment and International Cooperation Minister Daily News Egypt 1 st March

4 EGYPT AT GLANCE EXCHANGE RATES 2 ND MAR 17 9 TH FEB 17 9 TH MAR 16 2 ND JAN USD EUR STERLING POUND Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 EGP per USD EGP per Euro EGP per Pound Sterling STOCK MARKET 12,853 2 ND MAR 17 9 TH FEB 17 9 TH MAR 16 2 ND JAN 17 EGX30 12,853 12,310 13,115 6,373 12,291 EGX EGX100 1,235 1,152 1, ,099 T-BILLS AUCTION AUCTION DATE 5 TH MAR 17 5 TH MAR 17 INTEREST RATES OVERNIGHT DEPOSIT RATE OVERNIGHT LENDING RATE CORRIDOR RATE *AT NOVEMBER 2016 GLOBAL COMMODITY PRICES BRENT CUDE* GOLD** WHEAT*** 1, *USD/BARELL **USD/OUNCE SOURCE: BLOOMBERG **AT JUNE 2016 MATURITY (DAYS) CURRENT* 14.75% 504 1,225 2 ND MAR , **USD/BU AVERAGE YIELD (%) PREVIOUS** 6, ,099 9 TH FEB 17 9 TH MAR 16 2 ND JAN , , , CONSUMER PRICE INDEX AND MAJOR COMPONENTS HEADLINE- ALL ITEMS FOOD AND BEVERAGES TOBACCO AND RELATED PRODUCTS CLOTHING AND FOOTWEAR HOUSING, WATER, ELECTRICITY AND GAS FURNISHINGS AND HOUSEHOLD EQUIPMENT 3.77% MEDICAL CARE TRANSPORTATION COMMUNICATIONS RECREATION AND CULTURE EDUCATION HOTELS, CAFES AND RESTAURANTS MISCELLANEOUS GOODS AND SERVICES WEIGHT IN JANUARY JANUARY BASKET % (INDEX) (JANUARY 2010=100) 100% 39.92% 2.19% 5.41% 18.37% 6.33% 5.68% 3.12% 2.43% 4.63% 4.43% 3.73% Y/Y 28.14% 37.24% 26.55% 19.85% 9.21% 29.13% 32.92% 25.11% 1.80% 16.19% 12.32% 32.52% 30.72% 4

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