Egypt / the N11 by Prof. Phileas Frogg , ( the tour of the world in 80 clicks)

Egypt one of the N11 ,(I)

1) New finance minister but the most is the same like before.
2) UAE does not stop investments in the energy sector
‎3) French company Total to open US$3 billion plant in Egypt
4)Corruption

5)EgyptAir to double flights to Libya
6) foreign reserves plunging
7) Deficit to climb
8)Iron companies fix prices in response to lower demand9)Egypt to increase Suez Canal tolls 3 percent
1) New finance minister but the most is the same like before.

Momtaz El-Said’s appointment Wednesday makes him Egypt’s fourth finance minister this year but that does not mean any real change with the old bureaucracy and apparatus-Said will serve in the cabinet unveiled Wednesday under septuagenarian Prime Minister Kamal al-Ganzouri, who is also an economist. The ruling Supreme Council of the Armed Forces (SCAF) tasked Ganzouri with forming a new cabinet, after the previous one led by Essam Sharaf resigned amid massive protests against military rule in late November.
The new finance minister said he would not alter the financial year 2011/12 state budget, which has been heavily criticized for insufficiently funding healthcare and education.In October, Egypt approved a new monthly minimum wage of LE700 for the private sector, which takes effect in January.
The reality of the public sector being able to take on new measures, though, is in doubt given the budget deficit. The financial year 2011/12 deficit is expected to reach LE133 billion, which represents 8.6 percent of gross domestic product, though many independent economists predict it will rise even higher.Said has said that it is too early to determine the fate of the US$3.2 billion International Monetary Fund loan deal Egypt began renegotiating in November after initially rejecting it in June.The Finance Ministry and CBE have resorted to borrowing from the domestic market to meet financing needs by issuing government securities and treasury bills — an expensive option with one-year notes offering a 14.9 percent interest rate. The IMF loan is understood to be much cheaper, with a pay-back interest rate of around 3 percent, and has few conditions attached.

2) UAE does not stop investments in the energy sector
‎
The United Arab Emirates will continue to invest in Egypt, especially in petroleum and renewable energy.Egypt has been a chief destination for UAE investments both before and after the 25 January revolution, Hamli told Egypt Independent on the sidelines of the World Petroleum Congress meeting in Doha, Qatar.The UAE does not intend to halt investments in Egypt, the minister emphasized, adding that Dana Gas, an Emirati company and the Middle East’s leading private sector natural gas firm, is one of the largest gas producers in Egypt.The UAE also owns more than 15 percent of the Arab Petroleum Pipelines Company, which transports petroleum from Suez to Alexandria ports for shipping to European and American markets.

3) French company Total to open US$3 billion plant in Egypt

French energy company Total is signing a contract with the Egyptian Petrochemicals Holding Company to establish a US$3 billion plant for the production of olefins by steam cracking of natural gas, said a Petroleum Ministry official.The plant is planned to be established in the industrial zone in the North West of the Gulf of Suez, and will include a methanol-to-propylene processing unit.On the sidelines of the World Petroleum Council Conference being held in Doha, Qatar, the official said the deal would help attract more international investments and that it will enhance Egypt’s quota of polyolefins in both regional and global markets.The expected production capacity of the plant will reach an annual 470,000 tons of polypropylene, 185,000 tons of gasoline, 40,000 tons of LPG, and 530,000 tons of acetic acetic. The plant will be established over a three-year period, to begin production by late 2014.In related news, Qatar’s state oil company Qatar International will contribute US$200 million to the Egyptian Refining Company located in Shoubra al-Khaima. The company will cost a total of US$3.7 billion.According to a senior official in the Petroleum Ministry, intensive negotiations are underway between officials from the Egyptian Refining Company and others from the Petroleum Authority to discuss the final details of the deal, which aims to build the newest and largest refineries in Egypt and North Africa.

4)Corruption

When an Egyptian administrative court ruled in mid-September that Tanta Linens, Shebin Textiles and Weaving Company, and Al-Nasr Company for Steam Boilers must be returned to public administration due to contractual and procedural irregularities in their privatization six years ago, workers, labor organizers and anti-corruption activists rejoiced. After more than two years of legal action and labor unrest, they believed that their demands had been achieved and the corrupt privatizations were reversed. To celebrate, labor activists threw a party for the workers and their families.That celebration may have been premature. Workers from Tanta Linens are once again gathering outside its factory to ensure that the three-month-old court ruling is actually implemented. It hasn’t been, yet. On Wednesday, workers will again strike to protest the slow pace of the handover.Outgoing Finance Minister Hazem al-Beblawy announced three weeks after the court decision that the government will appeal. Plaintiffs expect a final verdict on the annulment of the initial privatization deal on 17 December. Beblawy insists that the decision to appeal is a matter of due course, and not an indication of policy. “The government must appeal any court ruling that puts it at fault in order to ensure justice is complete,” he said. But those who have worked hard to reverse the privatization of these companies fear that their efforts may be lost in the appeal process.On Saturday, anti-corruption activists received another boost when the investments department of the Supreme Administrative Court ruled in favor of annulling the contract of the privatization of the Arab Company for Foreign Trade. That company was sold in 1999, under the first tenure of the current prime minister, Kamal al-Ganzouri, for LE13 million, while its assets alone are worth LE400 million, according to plaintiffs.Laborers hope that this ruling will be implemented more quickly. “Workers are fed up,” said Gamal Othman, one of the organizers of Wednesday’s protest and former employee at Tanta Linens. If the court rejects the Finance Ministry’s appeal, the Tanta Linens Company will be returned to state control. Until then, Abdallah Saleh al-Kaaki, the Saudi investor who bought it from the government in 2005, holds on to the company. The government’s decision to appeal the ruling indicates that it is far from instituting a policy of re-nationalization. “In fact, the action taken by the government raises doubts about its desire to once again run these companies,” said Alaa Abdel Tawwab, a lawyer at the Egyptian Center for Economic and Social Rights, a NGO that has been instrumental in the anti-corruption efforts.This reluctance may have many reasons beyond the government’s desire to save face due to its previous indiscretions. There are also numerous legal and financial issues that they may not want to get tangled up with.Al-Nasr Steamers is the only one of the three companies in the recent lawsuit that has been re-sold since being privatized. According to Abdel Tawwab, the law stipulates that the government would have to compensate the most recent owner. This would mean that the government would have to buy back the companies at a much higher price than it had originally sold them for, since many allege that they were sold at below market rates. The great difference in price might raise questions about the financial viability of the government buying back the companies, especially given Beblawy’s recent comments about a severe cash shortage.
The government also has the option of immediately selling the company to another party. Okl, who is running for parliament in Tanta, believes that the ideal solution for any financial difficulties the government may have in reacquiring the companies is to sell shares to Egyptians. “They used to be owned by the people anyway — this is a more direct form of ownership,” he said.Further complicating the legal battle is that many of the investors are foreign and could accuse the Egyptian government of breach of contract, then resort to international arbitration. Abdel Tawwab believes that this will not be an issue since international arbitration cannot overrule legal decisions that deal with corruption.To date, the military-backed interim government has not shown much political will to rectify issues like corrupt privatization deals. But some activists believe that a democratically elected government might be more responsive.

5)EgyptAir to double flights to Libya

EgyptAir announced Monday it will increase its number of flights to Libyan cities, starting on 7 December.

The airline will offer 21 flights per week instead of 11.Hussein Massoud, head of EgyptAir Holding Company, told Al-Masry Al-Youm that the company will operate two flights daily to Tripoli and one to Benghazi.In November, EgyptAir had decided to resume flights to Benghazi with four flights weekly. It also resumed daily flights to Tripoli.Monday it will increase its number of flights to Libyan cities, starting on 7 December.The airline will offer 21 flights per week instead of 11.Hussein Massoud, head of EgyptAir Holding Company, told Al-Masry Al-Youm that the company will operate two flights daily to Tripoli and one to Benghazi.In November, EgyptAir had decided to resume flights to Benghazi with four flights weekly. It also resumed daily flights to Tripoli.

6) foreign reserves plunging

Egypt’s foreign reserves will plunge by a third to US$15 billion by the end of January and the budget deficit will grow, possibly leading to a review of sensitive subsidies, a military official said on Thursday, highlighting the nation’s dire finances.Reserves have tumbled since the uprising that toppled Hosni Mubarak as foreigners have fled and tourists packed their bags, hurting two of Egypt’s main sources of hard currency.The central bank put reserves at $22 billion at the end of October, down $2 billion from a month earlier and showing a faster fall than previous months. Economists said even that level left limited firepower to cope with a looming currency crisis.By end of January of next year foreign reserves will go down to $15 billion dollars and only $10 billion dollars will be available. That is only enough for two months (imports cover),” Nasr said, adding that $5 billion was already committed in payments to foreign investors or for other obligations.
Egypt’s pound has tumbled to seven-year lows and economists predict it may weaken more in 2012 unless a new government can swiftly restore confidence in a country that had been a darling of foreign investors until this year’s political turmoil.
The market has become more conscious of currency risks over the past few months as local borrowing costs have risen and the rate of reserve burn has accelerated.
The government turned down a $3 billion financing facility from the International Monetary Fund in the summer. The finance minister at the time said Egypt would turn to domestic financing resources and that military rulers did not want to build up debts.

7) Deficit to climb

The current finance minister has said Egypt is ready to seek IMF funds again, but Nasr reflected army discomfort with borrowing from the IMF, saying that such funds came with conditions and led to questions over sovereign policy issues.
The deficit in financial year 2011/12 was set to climb from the LE133 billion ($22 billion) originally forecast by the government, which represents 8.6 percent of gross domestic product (GDP).Nasr said the deficit would now climb to LE167 fiscal year 2011/12, a level economists said would represent roughly 11 percent of GDP. For the Government here are several solutions (to dealing with the deficit). One of them is reviewing subsidies, particularly petrol subsidies. We prefer not to borrow money from abroad. The loans come with strings attached that undermine state sovereignty

Economists have questioned the ability of Egyptian banks to meet the shortfall without foreign funds. Fuel subsidies represent 20 to 25 percent of total state spending and refusing external financing of the deficit does not seem to be an economically sound decision at the moment
Negotiations for cash from Gulf Arab states had so far only yielded $1 billion in budgetary supportand $1 billion from the Gulf, Saudi Arabia and Qatar. There has not been more money coming to Egypt.
Western diplomats say Saudi Arabia is unhappy with the decision to put Mubarak, a longtime ally, on trial for corruption and over the killing of protesters.

8)Iron companies fix prices in response to lower demand

Iron companies operating in the local Egyptian market have declared they will not raise prices in December despite rising costs for raw materials. Sales plunged by 30 percent over the past two months.The companies wish to reduce their stocks of products during the current market recession, which is caused by security and political instability.The head of the rebar division at the Federation of Egyptian Chambers of Commerce, Samir Noamani, said in December the price of iron will remain LE4500 per ton in Cairo, and reach nearly LE4650 in Upper Egypt.He told Al-Masry Al-Youm that the price fixing comes in response to the rising value of the US dollar vis-à-vis the Egyptian pound. A stronger dollar increases market rates for crude material.Noamani explained that operations were halted at several government projects as the result of the government’s failure to pay companies their dues. He noted that renovations at the Alexandria desert road have been brought to a halt over payments delayed since May 2010.Ahmed al-Zeiny, the head of the building materials division at the Cairo Chamber of Commerce, confirmed that iron companies fixed their prices in December.Ezz Steel has fixed its prices at its November rate of LE4500 per ton. Beshay Steel charges LE4495, and Attal National Steel charges LE4470.

9)Egypt to increase Suez Canal tolls 3 percent

Suez Canal tolls for all vessels will increase 3 percent as of March.The toll increase was based on studies the canal management conducted over recent months regarding maritime transport forecasts for next year, according to an authority statement. The studies took into account predicted economic growth in various regions around the world and trade expectations.The authority added that it also considered the canal’s vital economic role in Egypt and abroad, the importance of keeping it an affordable maritime route and the stability of tolls over the past three years.The waterway is a vital source of foreign currency for Egypt, along with tourism, oil and gas exports and remittances from Egyptians living abroad.

Note :
I) the N11 :Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey,Vietnam