Egypt eco­nomic con­di­tions will im­prove: Sisi

For­eign ex­change short­age, rise in cus­toms du­ties bite hard

Kuwait Times - - BUSINESS -

Pres­i­dent Ab­del Fat­tah Al-Sisi said yes­ter­day that tough eco­nomic con­di­tions in Egypt would im­prove in six months and called on busi­ness­men and in­vestors to help the gov­ern­ment curb price in­creases. Speak­ing at the open­ing of a fish farm project in the Suez Canal city of Is­mailia, Sisi praised Egyp­tians for the way they had dealt with harsh eco­nomic re­forms. “The ef­forts to al­le­vi­ate those ef­fects are mas­sive,” he said.

Egypt took mar­kets by sur­prise on Nov 3 when it aban­doned its pound cur­rency’s peg to the dol­lar in a move aimed at at­tract­ing cap­i­tal in­flows and weak­en­ing a cur­rency black mar­ket that had all-but dis­placed the banks. Hours later, the gov­ern­ment hiked fuel prices. The flota­tion helped the cash-strapped gov­ern­ment clinch a$12 bil­lion IMF loan pro­gram it hopes will re­vive growth ham­pered by po­lit­i­cal un­cer­tainty since the 2011 up­ris­ing that ended Hosni Mubarak’s 30-year rule.

Sisi came to power promis­ing eco­nomic re­form and sta­bil­ity but prob­lems have piled up. With a bud­get deficit of 12 per­cent and a loom­ing fund­ing gap, he was forced to un­der­take harsh eco­nomic mea­sures. Egyp­tians, many of whom are forced to scrape by from day to day, feel hard-hit by tax rises, soar­ing food price in­fla­tion, and cuts in state sub­si­dies. Prices in the most pop­u­lous Arab coun­try are likely to keep ris­ing next year, econ­o­mists say, driven by the re­forms.

The main mea­sure of in­fla­tion is at eightyear highs above 19 per­cent, as a for­eign ex­change short­age and a rise in cus­toms du­ties bite hard in a coun­try that im­ports ev­ery­thing from sugar to lux­ury cars. Egypt raised electricity prices by 25 to 40 per­cent and in­tro­duced a 13 per­cent value-added tax in Au­gust. In his speeches, Sisi has sought to per­suade Egyp­tians that col­lec­tive sac­ri­fice is nec­es­sary to save the coun­try from fi­nan­cial ruin.

Yes­ter­day’s speech he or­dered the gov­ern­ment to make greater ef­forts to curb price in­creases and asked busi­nesses and in­vestors to play their part. “I am not just telling the gov­ern­ment, I am also telling cit­i­zens, busi­ness­men, and in­vestors: please stand be­side your coun­try Egypt for just six months and you will find things much bet­ter than they are now.”

New oil and gas deals

In other news, Egyp­tian Oil Min­is­ter Tarek El Molla has signed three off­shore oil and gas ex­plo­ration and pro­duc­tion deals worth a to­tal of at least $220 mil­lion with France’s To­tal, Bri­tain’s BP, and Ital­ian oil ma­jor ENI’s Egyp­tian sub­sidiary IEOC, the min­istry said yes­ter­day. The deals in­clude drilling for six wells and a sign­ing bonus of $9 mil­lion, the min­istry said in a state­ment, and are the re­sult of a ten­der called by Egyp­tian state gas board EGAS. They are all in ex­plo­ration blocks in the Egyp­tian Mediter­ranean Sea. The first deal, with a con­sor­tium of BP and IEOC, is worth $75 mil­lion for an ex­plo­ration block in the North Ras El Esh block; the sec­ond, with a con­sor­tium of all three com­pa­nies, is in the North El Ham­mad block and is worth $80 mil­lion, and the third, with BP alone, is in the North Tabia block and worth $65 mil­lion. Egypt has gone from ex­port­ing en­ergy to be­ing a net im­porter as do­mes­tic out­put has failed to keep pace with ris­ing de­mand. Saudi Ara­bia in­formed Egypt last month that ship­ments of oil prod­ucts ex­pected un­der a $23 bil­lion aid deal had been halted in­def­i­nitely. The gov­ern­ment is seek­ing ways to help the coun­try cope and Molla said last week that Egypt wanted to im­port crude oil di­rectly from Iraq and he hoped to fi­nal­ize the deal by the first quar­ter of 2017. The oil sec­tor in Egypt has signed 73 oil and gas ex­plo­ration deals with in­ter­na­tional oil com­pa­nies in the past three years worth at least $15 bil­lion so far, Molla said in yes­ter­day’s state­ment, and sign­ing bonuses of over $1 bil­lion for the drilling of 306 wells. Ear­lier yes­ter­day, an EGAS of­fi­cial told Reuters the board had de­ter­mined Egypt needed around 100 ship­ments of liq­ue­fied nat­u­ral gas worth $2.2 bil­lion in 2017 and had al­ready se­cured 60 ship­ments.

CAIRO: A traf­fic po­lice of­fi­cer stands in front of an ad­ver­tise­ment on Christ­mas day.

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