VLADIMIR PUTIN VISITS EGYPT Russian President Vladimir Putin held talks with President Abdel Fattah Al-Sisi last Monday in Cairo, where they discussed the bilateral relations between the two countries and several regional issues. The two presidents witnessed the signing of an agreement launching Egypt s first nuclear power plant at Dabaa on the north coast. According to the Russian state atomic energy corporation Rosatom, the nuclear plant, which will cost up to USD21 billion, is expected to be completed by 2028-2029. Russia will extend a loan to Egypt, covering 85% of the construction costs. The initial agreement signed by the two countries in 2015 stipulated that Russia will build four reactors, generating a total output of 4,800 megawatts. Egypt and Russia s transportation ministers signed in Moscow a protocol to resume flights between Cairo and Moscow for the first time since 2015, starting February 2018. They also agreed to discuss in April the resumption of flights from Moscow to other Egyptian cities like Sharm El-Sheikh. Flights between Russia and Egypt were halted in 2015 after the crash of a Russian plane over Sinai that killed all 224 people on board. IN THIS ISSUE We have agreed on mandating our ministers to follow up with issues related to economic ties and resolve any obstacles to the finalizing of projects that would be executed in the near future, in line with the spirit of coordination that has distinguished recent negotiations on constructing the Dabaa nuclear plant President Abdel Fattah Al-Sisi Ahram Online 11 th December 2017 Experimental Production Began At Zohr Balance Of Payments Runs A Surplus New Rating Actions From Moody s 1
EXPERIMENTAL PRODUCTION BEGAN AT ZOHR Experimental production began at Egypt s giant offshore gas field Zohr at an initial 350 million cubic feet per day (mcfd). The Petroleum Ministry spokesperson, Hamdy Abdel-Aziz, stated that the project s first stage is expected to be completed in June 2018, where production is going to increase to 1 billion cubic feet per day (bcfd). The Petroleum Minister, Tarek El-Molla, also declared that the second stage is due to be finalized by the end of 2019, with production reaching 2.7 bcfd. Investments for the first and second stages are estimated at over USD12 billion. Production from Zohr will contribute to turning Egypt into a regional hub for trading gas and petroleum production. The Zohr project will lead to a decrease in Liquefied Natural Gas (LNG) imports, saving Egypt USD2 billion annually when production reaches 1 bcfd by the end of the first phase in June 2018 Hamdy Abdel-Aziz The Petroleum Ministry Spokesperson 17 th December 2017 BALANCE OF PAYMENTS RUNS A SURPLUS USD BN Q1 2016/17 Q1 2017/18 GROWTH RATE% Egypt s overall Balance Of Payments surplus rose to USD5.1 billion In Q1 of FY 2017/18, from USD1.9 billion in the same quarter a year earlier. Petroleum Exports Non-Petroleum Exports 1.53 3.74 1.78 4.06 16.8% 8.6% This was attributed to the fact that the current account deficit narrowed by 65.7%, and the capital and financial account recorded a net inflow of USD6.2 billion. Petroleum Imports Non-Petroleum Imports 2.75 11.93 2.79 11.99 1.5% 0.5% Current account includes goods and service balance in addition to official and private transfers (remittances), while the capital and financial account mainly includes physical and financial investments. Suez Canal Revenues Tourism Remittances 1.30 0.76 4.35 1.38 2.70 5.97 6.3% 255.7% 37.2% The improvement in the trade balance reflects the improved competitiveness of Egyptian exports in world markets following the float of the exchange rate Net FDI Portfolio Investments In Egypt Overall Balance 1.87-0.84 1.89 1.58 7.48 5.08-15.7% 168.5% The Central Egypt s Statement 11 th December 2017 Source: Central Egypt 2
NEW RATING ACTIONS FROM MOODY S Moody s rating agency issued new rating actions related to Egypt s banking sector, as follows: Affirmed the B3 local-currency long-term deposit ratings of the three government-owned banks, National Egypt SAE, Banque Misr SAE and Banque du Caire SAE. Upgraded their respective standalone Baseline Credit Assessments (BCAs) to b3 from caa1. Affirmed the B2 local-currency long-term deposit rating of ALEXBANK and B3 local-currency long-term deposit rating of Commercial International Bank (Egypt) SAE (CIB), as well as their b3 BCAs. The primary driver for the upgrade of the government-owned banks BCAs is the improvement in the Egyptian operating environment, with better growth prospects, stronger institutions and lower political risk, which will support the solvency of the banks. The affirmation of their local currency deposit ratings at B3 balances the banks improved standalone profiles against the B3 rating of the government, to which the banks are heavily exposed. The b3 BCAs and all ratings of ALEXBANK and CIB were affirmed, despite the improved operating conditions, as their standalone ratings are already at the government s rating level. Despite the negative outlook for the African banking system next year due to macroeconomic risks, declining government support and sovereign credit risk, the banking sector in Egypt, Morocco and Nigeria will perform better in 2018, while banks in Tunisia, South Africa and Kenya will be affected by these Difficult circumstances Moody s Masrawy 12 th December 2017 3
EGYPT AT GLANCE EXCHANGE RATES 26 24 22 20 23.72 20.92 11 TH DEC 17 19 TH NOV 17 18 TH DEC 16 18 16 17.81 USD 17.81 17.81 17.63 18.33 18.18 14 12 EUR 20.92 20.95 20.78 19.12 19.11 10 8 STERLING POUND 23.72 23.82 23.28 22.89 22.42 6 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 EGP USD EGP Euro EGP Pound Sterling per per per STOCK MARKET 16,000 14,000 14,721 12,000 11 TH DEC 17 19 TH NOV 17 18 TH DEC 16 10,000 EGX30 1,4721 14,427 13,742 11,398 7,464 8,000 6,000 EGX70 836 785 755 454 358 4,000 2,000 EGX100 1,956 1,848 1,715 1,069 765 0 T-BILLS AUCTION CONSUMER PRICE INDEX AND MAJOR COMPONENTS AUCTION DATE 17 TH DEC 17 MATURITY (DAYS) 91 AVERAGE YIELD (%) 18.919 WEIGHT IN BASKET % OCT 2016 OCT 2017 (INDEX) (JANUARY 2010=100) Y/Y 14 TH DEC 17 182 18.923 HEADLINE- ALL ITEMS 100% 195.78 256.12 30.82% 17 TH DEC 17 266 18.115 FOOD AND BEVERAGES 39.92% 235.90 329.23 39.56% 14 TH DEC 17 357 18.059 TOBACCO AND RELATED PRODUCTS 2.19% 370.82 464.24 25.19% INTEREST RATES CLOTHING AND FOOTWEAR HOUSING, WATER, ELECTRICITY AND GAS 5.41% 18.37% 142.04 136.88 177.58 155.52 25.02% 13.62% OVERNIGHT DEPOSIT RATE OVERNIGHT LENDING RATE CORRIDOR RATE *AT JULY 2017 **AT MAY 2017 GLOBAL COMMODITY PRICES CURRENT* 18.75% 19.75% 19.25% PREVIOUS** 16.75% 17.75% 17.25% FURNISHINGS AND HOUSEHOLD EQUIPMENT MEDICAL CARE TRANSPORTATION COMMUNICATIONS RECREATION AND CULTURE EDUCATION 3.77% 6.33% 5.68% 3.12% 2.43% 4.63% 166.24 172.67 151.47 98.56 207.53 246.00 219.30 209.06 205.11 109.41 293.88 294.16 31.91% 21.07% 35.41% 11.01% 41.61% 19.58% BRENT CRUDE* GOLD** 63.78 1259.22 11 TH DEC 17 17 TH NOV 17 19 TH DEC 16 64.69 62.72 54.92 1242.02 1292.42 1138.21 56.82 1,314.84 HOTELS, CAFES AND RESTAURANTS MISCELLANEOUS GOODS AND SERVICES 4.43% 3.73% 231.85 136.46 292.51 163.01 26.16% 19.46% WHEAT*** 422 413.5 443.5 405 465.00 4 *USD/BARELL **USD/OUNCE SOURCE: BLOOMBERG **USD/BU
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