Economy in a week: Funds from Gulf and EU

Fresh money comes in from the Gulf and European Union, as the head of the tax authority urges staff to work harder to plug the budget deficit. Meanwhile, Egyptian exports have witnessed a marked rise during the course of 2013. Finally, news for doctors and teachers, as the government allocates higher budgets for their wages.

Arab interests deepen in Egypt

The United Arab Emirates’ Sheikh Khalifa Fund will endow US$200 million to Egypt’s Social Fund for Development to finance small and medium enterprises in governorates, mainly addressing the problem of unemployment.

The deal was finalized on the sidelines of the Egypt/GCC Investment Forum earlier this month, and the funds should be deposited at the Central Bank of Egypt at the start of the new year.

The UAE has already pledged $4.9 billion of aid to Egypt, including $1.9 billion in fuel supplies and other assistance. There are similar negotiations between Saudi Arabia and Egypt regarding $5 billion, according to an anonymous government source, as reported by Al-Mal. This would raise the total amount of Gulf aid to $17 billion.

Investments in Egypt by Kuwait reached $2.8 billion, according to Minister of Investment Osama Salah, while bilateral trade between the countries amounts to $3.4 billion, as reported by the CBE. Saudi Arabia gets a bigger share of the pie, with bilateral trade amounting to $3.8 billion — the second-largest Arab beneficiary of Egyptian exports after the UAE — importing goods totaling $887 million in the fiscal year 2013, ending June 30.

Egyptian exports on the rise

Non-petroleum exports in Egypt amounted to LE134 billion in the first 11 months of 2013, increasing by 12% from a comparative period last year. The amount represents 93% of the country’s annual strategic export target, standing at LE145 billion until year-end December, according to Minister of Industry and Trade Mounir Fakhry Abdel Nour.

Agriculture exports grew by 37%, reaching a total of LE12.5 billion, food industry exports rose by 15% to stand at LE18.2 billion, while garment exports went up by 12% to stand at LE8.8 billion for the same period.

Tax Authority inches up collections

The Tax Authority was able to raise its proceeds by 19% in the five months between July and December 2013, collecting income tax of LE51.1 million and sales tax of LE29.2 million, according to Mamdouh Omar, head of the Tax Authority.

Omar encouraged tax employees to intensify their effort to reach the estimated annual tax collection of LE325 million — estimated at 60% of the state budget, while highlighting a huge state deficit that needs to be balanced through government revenues.

LE500 billion in 10 years

During the Egyptian-Kuwaiti conference held last Wednesday, and following talks on Egypt’s road map, Minister of Planning Ashraf al-Araby said Egypt needs to attract investments of LE500 billion over the coming 10 years to reach required growth rates, according to Egynews.

He explored Egypt’s Urgent Investment Plan, which aims to invigorate the Egyptian economy while attaining social justice. The plan entails LE54 billion in investments, of which LE30 billion targets infrastructural investments, including 35 industrial areas to be completed before June 30, 2014.

Deputy Prime Minister Hossam Eissa said the government’s Urgent Investment Plan will channel LE22 billion towards enabling many factories to work at full capacity, and developing state hospitals. He added that the government would pay contractors LE11 billion in arrears to finish stalled work, according to Egynews.

Eissa pointed out that a committee has been formed to rehabilitate university hospitals, in coordination with a number of businesspersons. This will enable the purchase of medical supplies and equipment and complete hospital construction that has been stalled for several years. Naguib Sawiris will finance the overhaul of Sohag University Hospital, and Salah Diab will fund the restructuring of Assiut University Hospital.

News for doctors and teachers

The Cabinet agreed at its meeting last week to set earnings for medical professionals at LE6.5 billion, to improve the income levels of doctors and motivate them to work and improve health services in remote areas.

Newly graduated doctors can earn as little as LE300 per month. In October 2012, doctors in public hospitals organized a strike to demand a new wage law that guarantees a minimum salary of LE3,000, better security in hospitals, and an increase in the state budget allocated to the health sector.

It was also decided, according to Finance Minister Ahmed Galal, to increase the wages of 1.5 million teachers in education and within Al-Azhar. Resources allocated will amount to LE2 billion.

Stock market at highest level in three years

An influx in foreign cash during Egypt’s interim period has inspired investor confidence in the stock market, with EGX30 reaching its highest levels since January 26, 2011.

The main index reached 6,604.65 on Thursday, rising by 1.8%, with market capital gaining over LE5 billion. Purchases were predominantly made by individual Egyptian investors and investment funds on large cap companies.

EU signs EUR20 million program

The European Union signed a EUR20 million agreement with the Deutsche Gessellschaft fur Internationale Zusammernarbeit (GIZ) to develop informal areas in Cairo.

The initiative forms part of a five-year EUR90 million EU Spring Package Program signed within the Egyptian-German Development cooperation, which targets the improvement of residences in five informal areas within Greater Cairo.

Economy in numbers

– CBE reports that the rate of inflation in November increased, for an annual rate of 11.95%, compared with 11.15% in October.

– In a recent study, AC Nielsen said mobile Internet users increased this year by 7%, making the total Internet users from mobiles 23%.

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