THE IMF COMPLETES THE SECOND REVIEW OF EGYPT S REFORM PROGRAM The International Monetary Fund (IMF) completed the second review of Egypt s reform program. The completion of the review allows the authorities to draw a USD2.03 billion tranche of the USD12 billion Extended Fund Facility, bringing total disbursements released to about USD6.08 billion. The IMF praised Egypt s economic reforms, which curbed inflation levels, while calling for further reforms, including energy subsidy that is critical for achieving the program s fiscal objectives. The Fund also sees that implementing tax policy reforms and modernizing tax and customs administration are needed over the medium term to create fiscal space for much-needed investment in human capital and infrastructure. The IMF specifically praised Egypt s central bank that managed to reverse high inflation, which was the main risk to macroeconomic stability, by tightening monetary policy early in the year. The IMF upgraded Egypt s economic growth forecast to 5.5% in FY 2018/19 from 5.3% in the first review. Egypt s reform program is yielding encouraging results. The economy is showing welcome signs of stabilization, with GDP growth recovering, inflation moderating, fiscal consolidation remaining on track, and international reserves reaching their highest level since 2011 David Lipton IMF First Deputy Managing Director IMF Press Release No. 17/511 20 th December 2017 IN THIS ISSUE Al-Sisi Inaugurates New Projects Electricity Interconnection Project With Saudi Arabia Remittances Rise By 20% CBE Issues New Monetary Policy Report Number Of Tourists To Egypt Increases 1
AL-SISI INAUGURATES NEW PROJECTS President Abdel-Fattah Al-Sisi inaugurated different development projects in the East Suez Canal development zone in northern Ismailia. These projects included: A tunnel in northern Ismailia, connecting Egypt s northwestern city of Salloum to Al-Awja road in North Sinai. A tunnel in southern Port Said, connecting Salloum to Rafah city in North Sinai. Two floating bridges in Ismailia and Qantara. The second phase of the fish farm project over an area of 7,500 feddans. The completion of the construction of the tunnels in less than a year and half, instead of the initial estimate of 12 years is a remarkable achievement President Abdel Fattah Al-Sisi Ahram Online 24 th December 2017 The Electricity Minister, Mohamed Shaker, announced that Egypt is in talks with Saudi Arabia for an electricity interconnection project at a total investment cost of USD1.56 billion and with a capacity of 3000 megawatts. The first phase of operations in the project is set to start in 2021. Shaker also declared that Egypt plans to generate 42% of its electricity from renewable energy by 2025. The Electricity Ministry is focusing on the strengthening of Egypt s electricity grid to allow for the import and export of electricity through interconnection projects Mohamed Shaker The Electricity Minister Ahram Online 19 th December 2017 Remittances increased by around 20% since Egypt floated the Egyptian Pound in November 2016 till October 2017 reaching USD24.2 billion from around USD20.2 billion during the same period a year earlier (November 2015-October 2016) 2
The Central Egypt (CBE) s Monetary Policy Report for September 2017 revealed that the outlook for average annual headline inflation remains consistent with achieving the CBE s target of 13% (±3%) in Q4 2018 and single digits thereafter. According to the report, strong favorable base effects are expected to accelerate disinflation, especially between November 2017 and February 2018. However, there are several risks surrounding the baseline inflation outlook, notably the evolution of inflation expectations, demand-side pressures as well as the timing and/or magnitude of any fiscal consolidation measures. Total number of tourists visited Egypt during January-November 2017 recorded 7.5 million, marking a 54.7% increase compared to the same period last year. The Egyptian tourism sector is showing signs of recovery especially with agreeing on the resumption of flights between Moscow and Cairo next February. 3
EGYPT AT GLANCE EXCHANGE RATES 26 24 23.83 18 TH DEC 17 26 TH NOV 17 25 TH DEC 16 22 20 18 21.13 17.84 USD 17.84 17.81 17.68 18.93 18.18 16 14 12 EUR 21.13 20.92 21.00 19.76 19.11 10 8 STERLING POUND 23.83 23.72 23.53 23.20 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 per USD EGP per Euro EGP per Pound Sterling STOCK MARKET 16,000 14,000 14,870 12,000 18 TH DEC 17 26 TH NOV 17 25 TH DEC 16 10,000 EGX30 14,870 14,721 14,223 12,251 7,464 8,000 6,000 EGX70 830 836 777 454 358 4,000 2,000 EGX100 1,961 1,956 1,807 1,084 765 0 T-BILLS AUCTION CONSUMER PRICE INDEX AND MAJOR COMPONENTS AUCTION DATE 24 TH DEC 17 MATURITY (DAYS) 91 AVERAGE YIELD (%) 18.770 WEIGHT IN BASKET % NOV 2016 NOV 2017 (INDEX) (JANUARY 2010=100) Y/Y 21 ST DEC 17 182 18.743 HEADLINE- ALL ITEMS 100% 205.27 258.60 25.98% 24 TH DEC 17 273 18.097 FOOD AND BEVERAGES 39.92% 247.63 327.59 32.29% 21 ST DEC 17 364 17.580 TOBACCO AND RELATED PRODUCTS 2.19% 400.66 518.35 29.37% INTEREST RATES CLOTHING AND FOOTWEAR HOUSING, WATER, ELECTRICITY AND GAS 5.41% 18.37% 156.93 139.11 198.23 155.52 26.32% 11.80% 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% 177.75 182.63 171.70 98.59 209.28 246.00 223.76 209.06 205.11 109.41 293.88 294.16 25.89% 14.47% 19.46% 10.97% 40.42% 19.58% BRENT CRUDE* GOLD** 65.25 1274.16 18 TH DEC 17 24 TH NOV 17 27 TH DEC 16 63.41 63.86 56.09 1262.26 1288.37 1138.78 56.82 1,314.84 HOTELS, CAFES AND RESTAURANTS MISCELLANEOUS GOODS AND SERVICES 4.43% 3.73% 243.03 141.70 292.51 180.87 26.36% 27.65% WHEAT*** 424.75 420.5 434.75 409.5 465.00 4 *USD/BARELL **USD/OUNCE SOURCE: BLOOMBERG **USD/BU
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