Monthly Report February 2018 Egypt s Economic & Political Update
Monthly Report February 2018 Page 1 FOREIGN POLICY & TRADE On the 4 th of March, Egypt s Supreme Court has overturned all provisions on Saudi Arabia's sovereignty over the uninhabited islands of Tiran and Sanafir, ending the controversial issue and recognizing the transfer of sovereignty Saudi Arabia On the 3 rd of March, Saudi Crown Prince Mohamed Bin Salman has arrived in Egypt and has met with President Abdel Fattah El Sisi as well as ministerial entities discuss ways enhance bilateral relations between the two countries. During the first day of his current visit, the two countries signed a MoU activate a USD 16 bn investment fund. o Also, signed an agreement protect the environment as well as a cooperation resolve political crisis in the Middle East. o Additionally, an executive program for cooperation encourage investment between the General Authority for Investment and Duty Free Zones in Egypt and the Public Investment Fund. The Sudanese Ambassador Abdel Mahmoud Abdel Halim will return Cairo in the second week of March after being recalled Kharum for two months after an incident in December 2017 where a hostile campaign was made by the media in Egypt against the Sudanese President after the Turkish President made a visit Sudan. Speaker of the Egyptian House of Representatives Ali Abdel Aal met with the Prime Minister of Vice President of the UAE as well as the ruler of Dubai His Highness Sheikh Mohammed Bin Rashid Al Makum in order enhance the ties between UAE and Egypt Egyptian company Dolphinus Holdings has agreed buy 64 billion cubic metres of Israeli natural gas for USD 15 billion from Delek Drilling, and its US partner Noble, during a 10-year period. The gas will be delivered Egypt from Israel's Tamar gas field, and the larger Leviathan gas field which is expected be operational in late 2019. The Foreign Minister of Venezuela, Jorge Ariassa, arrived in Cairo on the 24th of February for a visit meet with Foreign Minister Sameh Choukri and other officials. The purpose of the visit was discuss relations between both countries and ways enhance them. The Egyptian Businessmen Association hosted a delegation from Poland on the week of the 24th of February discuss investment opportunities in Egypt with the aim of improving the investment climate in Egypt and boosting growth rates. The Polish delegation includes the largest companies in the world and operates in various secrs of priority for the Egyptian market. PUBLIC POLICY & REGULATIONS The House of Representatives will resume its activities on February 25 th, beginning with the final discussion on a draft law amending some provisions of Law No. 152 of 1980 establishing the National Railways Authority of Egypt and a bill amending some provisions of Law No. 10 of 1990 on the ownership of real estate for public benefit, and the draft law regulating the National Council for Women. The Supreme Council for Medicine and Medical Technology Law which was previously known as The Egyptian Medicine Law has been drafted. The law has been approved by the Cabinet but has not yet been gazetted. There have been two recent presidential decrees be noted; The Presidential Decree No. 66 of 2018 concerns the approval of the trade agreement between Egypt and Gabon, and Presidential Decree No. 67 of 2018 concerns the approval of a loan agreement between the Egyptian Government and the Kuwait Fund for Arabic Economic Development contribute the financing of a KD 12 million project of developing drinking water system in the city of El Arish. Vice-Premier of the Council of State, Advisor Muhannad Abbas, decided form a specialized committee of the legislars review the law of the establishment of the Industrial Development Authority, after being handed over by the department the government in preparation for reviewing it and putting it in its legal position in accordance with the principles of the Supreme Council. STAKEHOLDERS UPDATE Mona Zobaa has returned her position as head of GAFI Khairat Mohamed Barakat: New Head of CAPMAS Hisham El Demiri, The Head of Tourism Promotion Authority has resigned
Monthly Report February 2018 Page 2 OTHER MONITORED TOPICS Minister of Planning, Follow-Up and Administrative Reform, H.E Hala El Said, revealed the following: Since 250K government employees leave the service annually after reaching the age of pension, stressing that the government will not employ anyone in the coming period. Statistics indicate here is an employee for every 20 citizens, while the global average is an employee for every 80 citizens, which is the government is aiming for. o The GoE aims transfer ministers offices the New Administrative Capital in the first half of 2019. The Central Bank of Egypt (CBE) supports SME s initiatives through allowing financial leasing firms benefit from low interest rates. The initiative for SMEs provides financings with 5%, 7% and 10% interest rate according the project s type, capital and annual sales volume. Revealed by Mona Zobaa, Head of GAFI, that Asian companies have requested the creation of two special free zones, which is facilitated by the new investment law. She has also submitted a request the Cabinet establish a public free zone in Taba Nuweiba area after completing coordination procedures with South Sinai governorate. A new curriculum developed by the recent partnership between U.S Agency for International Development and Ministry of Education aims help over 300 technical school students in Aswan and Hurghada specializing in renewable energy and prepare them for potential employment in Egypt s promising solar and wind secrs. The renewable energy curriculum will pilot in three schools and potentially aims expand 57 schools. Egyptian Minister of Trade and Industry Tarek Kabil claims that Egyptian exports the Russian market last year increased by 35% reach USD 504.6 million compared USD 374.1 million in 2016. The free trade agreement between Egypt and Eurasian economic countries is expected double Egyptian exports these countries. Minister of Trade and Industry, Tarek Kabil announced that the International Labor Organization (ILO) has initially agreed complete the second phase of the work program in Egypt until the end of 2018. Kabil claimed that this decision will contribute remove Egypt from the list of countries that are prohibited from manufacturing and exporting garments and furnishings international companies.
Monthly Report February 2018 Page 3 INFLATION According a statement from Fitch Ratings, expectations are that inflation will fall further this year but still remain in double digits. The CBE lowered the interest rate by 1 percent on February 15, as the inflation rates continue drop for the first time since November's flotation. Fitch also expected that CBE will be mindful of the risk of some outflows, even though its sck of FX reserves rose USD 42.5 billion, adding that the CBE has other reserve assets linked the bank s portfolio repatriation scheme. CBE is targeting inflation at 13% in the fourth quarter of 2018, calling for a tight monetary policy reduce inflation, which has already fallen 17% in January. 45% Headline Inflation Core Inflation 35% 25% 15% 5% Source: Central Bank of Egypt
Monthly Report February 2018 Page 4 NET INTERNATIONAL RESERVES Egypt last month raised USD 4 billion in a dollar-denominated Eurobond sale help plug its financing deficit and boost dollar holdings. Hany Farahat, a senior economist at CI Capital claimed: Net international reserves jumping a new safe level will enhance invesr confidence and minimize the funding gap even with the USD 12 billion of repayments outstanding for this year 45 40 35 30 25 20 15 10 5 0 USD Bn 26.3 26.5 28.5 28.6 31.1 31.3 36.0 36.1 36.5 36.7 36.7 37.0 38.2 January Febraury March April May June July August September Ocber November December January Febraury USD bn. 42.5 Source: Central Bank of Egypt
Monthly Report February 2018 Page 5 TOURISM Egypt's ambassador Hungary, Ambassador Mahmoud El Maghraby, participated in the opening of the Egyptian pavilion at the Budapest International Tourism Exhibition which started on the 1 st of March and continues until the 4 th of March. The exhibition was opened by the Deputy Mayor of Budapest and the Mayor of the city of Héviz, which is linked an agreement with Sharm el-sheikh. Maghraby said in a statement that the exhibition is the most important in Eastern Europe in terms of urism marketing and deals attract urists. The exhibition will be attended by about 280 exhibirs from 23 countries, which will enable Egyptian companies market their products. Maghraby also addressed an increase in the number of Hungarian urists Egypt, an increase of 138% in 2017 compared the previous year. Hisham El Demiri Head of the Tourism Promotion Authority has announced before he resigns that there will be four direct weekly flights from Kiev, Ukraine Cairo starting in April, which he believes will be a great opportunity introduce many different Egyptian destinations the Ukrainian people, especially given the opening of the Egyptian Grand Museum by the end of the year. Dr. Rania Al Mashat, Minister of Tourism, stated the GoE has adopted a comprehensive reform program focusing on Tourism as one of the key source of FX, while focusing in increasing employment in the secr. Therefore, the minister has met with ambassadors from key countries including the United Kingdom, Portugal, Singapore and embassies representatives of the United States of America, Japan and Uruguay, in order enhance cooperation in the field of urism from these countries. Tourism Minister Rania El Mashat has asked the heads of different administrations nominate five young calibers between the ages of 28 and 35 join the team in order cope with the ministry s development plan in the coming period. Number of Annual Tourists 9.8 11.5 9.5 9.9 9.3 5.4 6.7 2011 2012 2013 2014 2015 2016 2017 (until oct)
Monthly Report February 2018 Page 6 The Ministry of Planning s Medium Term Plan FY 2021/22 Construction Secr Wholesale & Retail Secr 12% 6.2% 14% 7% Foreign Direct Investment (USD Bn) National Poverty Rate 7.9 24.5 16 22% Tourism Secr 12% 14% Total deficit % of GDP 9.5% 4.3% Transport & Srage Secr 6% 6.5% Investment rate as a percentage of GDP 15% 24% Manufacturing Secr 6.5% 9.5% Unemployment Rate 11.3 9.5% Secral Growth Rate end of this year 2021-2022 Targets by 2021-2022
Monthly Report February 2018 Page 7 Law Statuses Health Insurance Law Gas Law Investment Law Trade Union Organization Law Bankruptcy Law Consumer Protection Law Bids & Tenders Law Local Administration Law Unified Building Law Labor Law Supreme Council for Medicine & Medical Technology Law SME Law Food Safety Law Cusms Law Early Drafting Phase Mid Cabinet Approval Phase Final Pending Parliament Discussion/Approval + Presidential ratification Complete Ratified by the President