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Economy in a week: Tourists should not fear terrorists
 
 
Courtesy: Laura Cugusi
 

In this week’s roundup, Tourism Minister Hesham Zaazou assures tourists that they are safe in Egypt despite terrorist attacks, and plans to install live stream cameras to prove it. In addition, the second economic stimulus package has been set in motion, with LE10 billion allocated for wage increases in the public sector. Finally, the Central Bank of Egypt (CBE) loosens its foreign currency grip.

Tourism minister promises tourists they’re safe

In the recent “Future of Tourism” conference, Zaazou declared that the country’s current problems had no relevance to foreigners.

The Brotherhood’s “terrorist attacks” do not target tourists but the police and military, he claimed, and were limited only to Cairo and a few other governorates.

Tourism is a major source of national income, garnering almost double the revenues of the Suez Canal, Zaazou stressed.

Prior to the 2011 uprising, tourism generated over 11 percent of Egypt’s gross domestic product (GDP).

Egypt ranked 18 in a list of top tourist destinations in 2010 but fell to the 22nd spot in 2013, Zaazou warned.

He added that Egypt has decided to focus on the European market as it represents 73 percent of incoming tourism, whereas only 20 percent of tourists come from Arab countries.

The ministry plans to launch an initiative that would enable internet users around the world to view Egypt’s major tourist attraction through live streaming cameras, Zaazou said. The strategically placed cameras — situated far from areas experiencing political upheaval — would reveal the safety of these locations.

Second stimulus package in action

The Cabinet has started spending the second stimulus package, valued at LE30 billion, Deputy Prime Minister Ziad Bahaa Eddin said on Wednesday. The United Arab Emirates has paid the bulk of that amount, contributing around LE20 billion, he added.

Both the first and second economic stimulus packages are currently in effect, said Eddin, who is also the minister of international cooperation. The LE10 billion provided by Egypt’s government in this second package will be used to fund the minimum wage increase that is scheduled to be implemented at the end of this month.

In September, the Cabinet declared the minimum wage for public sector employees would be raised to LE1,200 per month. An increase in the minimum wage for the private sector, and a timeline for when that would be implemented, has yet to be agreed upon.

Both stimulus packages, which total LE60 billion, will focus on investment in infrastructure and industrial areas.

CBE relaxes restrictions on foreign currency transfers

The CBE has relaxed restrictions on foreign currency transfers abroad, according to a statement released last week.

The statement said that banks would allow their clients to make a one-time transfer abroad of up to US$100,000 every calendar year starting January 2014. The new decree cannot be applied retroactively.

After the 2011 uprising, the CBE set an open-ended limit of US$100,000 for the amount an individual could transfer abroad in an effort to control and preserve foreign currency reserves.

The government has been easing regulations on financial transfers to encourage investments as part of its expansionary policy.

In the same vein, Egypt is also introducing new financial tools to reinvigorate the money market, CBE’s head of financial control Sherif Sami told Reuters on Thursday.

He said the bank’s board plans to amend the laws and regulations governing the market, such as issuing revenue bonds for the first time in Egypt. Pending approval from the Investment Ministry, these bonds would work to ease the financing of projects in Egypt.

Balance of Payments tilting more towards positive

The Cabinet achieved its year-end target of LE145 billion in exports, said Trade and Commerce Minister Mounir Fakhry in a statement issued on Thursday.

Exports went up by 11 percent in 2013 compared to last year, standing at LE147 billion.

Arab countries were the primary export partners, importing goods worth LE61.5 billion from Egypt. The European Union came in second, importing over LE40 billion worth of goods. Non-Arab African countries stood third at LE9 billion.

Ministry of Finance reveals wage increase per tier

The MOF released a table clarifying the increase in wage, from the sixth tier to the top, as follows:

 

Critics of the ministry’s statements on the minimum wage say the phrase “full wage amount” is unclear as it differs from net salary, and would have deductions made for pensions, insurance and tax. Others believe that salaries have not increased proportionately to inflation over the years, and so despite the current increase, salaries still emain substantially low.

The last minimum wage was set at LE700 in July 2011, and was only applied to permanent government workers. Prior to 2011, the minimum wage figure did not change since the days of President Anwar Sadat, set at that time to LE35.

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Sherif Zaazaa