EGYPT'S ECONOMY: AUGUST 2 PRESS ROUND-UP

UNCLAS CAIRO 001502

SIPDIS

STATE FOR NEA/ELA

E.O. 12958: N/A
TAGS: ECON EINV EFIN ETRD ENRG PGOV EG
SUBJECT: EGYPT'S ECONOMY: AUGUST 2 PRESS ROUND-UP


1. (U) The following are notable economic news stories that appeared
over the past week in the Egyptian press:

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Suez Canal revenue is 7.2% lower
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2. (U) Suez Canal receipts reached $4.7 billion during FY08/09, a
reduction of 7.2% from the previous year. Colonel Ahmad Fadel,
Chairman of the Suez Canal Agency, attributed the decline to the
economic slowdown resulting from the global financial crisis. Fadel
added that the Canal Agency decided not to lower the passage fees
after a careful study of global maritime market. (All newspapers,
7/27/2009)

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IMF staff visit to Egypt
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3. (U) The IMF praised Egypt's ability to contain the repercussions
of the global financial crisis. It also praised the Egyptian
economic reform that started in 2004. A recent IMF staff visit
report said the government is continuing to pump funds for
investment, especially in infrastructure. In general, the IMF said
the Egyptian economic performance for FY 08/09 was good and GDP
growth is expected at 4.4%. The report also said inflation declined
to below 10% down from its peak at 24% during August 2008 while
foreign reserves are still capable of covering imports for more than
6 months. (Al Ahram and Al Akhbar, 7/29/2009)

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Gas Export to Israel
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4. (U) Egyptian press referenced reports from the Israeli Newspaper
Ha'aretz and Globes magazine (on line) indicating that the Eastern
Mediterranean Gas company (EMG) has signed a new deal to import 12
billion square meters of Egyptian natural gas to the Israeli company
Dorad Energy Ltd. The duration of the contract is 17 years with the
option of a five-year extension. The total cost of the deal amounts
to about $2.1 to $2.7 billion. (El Masri El Yom and Yom 7,
7/29/2009) On the other hand, on July 26 the freedom committee of
the Journalist Syndicate organized an objection stand against the
gas exports at its headquarters. (El Masri El Yom, 7/27/2009) In a
meeting with students in a summer camp in Alex, former Mofti Nasr
Wassel said that the export of the natural gas to Israel is not
correct according to the Islamic Shareaa. (El Masri El Yom,
7/30/2009)

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Port Said topped world sea gateways in terms of growth in 2007
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5. (U) Egypt's East Port Said Port topped world sea gateways in
terms of growth in 2007, Mohamed Mansour, Egypt's Minister of
Transport, told members of the Arab Chamber of Commerce while
showcasing investment opportunities in the country's transport
sector. "The port's area will be increased to 56 square kilometers
to make future expansion possible, which will create thousands of
jobs for residents of Port Said and neighboring governorates," the
official said according to a statement released by the Ministry of
Transport. Development plans will be carried out in three phases
totaling LE500 ($89.2 million). The first phase will be finished by
2015, according to Ibrahim Seddiq, the Chairman of Port Said Ports
Authority. (Egyptian Gazette, 7/27/2009)

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Banks may consider restricting credit in foreign currencies
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6. (U) With the decline in both interest rates on foreign currencies
and forex revenues from abroad, banks are considering restricting
credit in foreign currencies, following a period of promoting this
type of credit. Banking sources said the previous expansion in
forex lending had exerted pressure on the foreign exchange interbank
market after the drop in some banks' forex positions, prompting the
CBE to inject more liquidity into the market, thus negatively
affecting foreign reserves. The CBE had become more stringent about
the banks' forex positions and liquidity ratios, which led banks to
start reducing forex lending. (Al-Mal, 7/27/2009)

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State-owned petroleum companies report their operations
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7. (U) In financial reports submitted to the Chairman of the
Egyptian General Petroleum Corporation (EGPC),state-owned petroleum
engineering and construction companies Petrojet and Engineering for
the Petroleum & Process Industries (ENPPI) posted total revenue for
the last three years. Petrojet's total revenue for the period was
LE 2.4 billion. ENPPI, currently conducting several projects in
Egypt, seven other Middle East nations and Venezuela, stated total
revenue of LE 1.2 billion during the same period. (Al Ahram,
7/30/2009)

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