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Cablegate: Egypt's Economy: November 2 Press Round-Up

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UNCLAS CAIRO 002078

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STATE FOR NEA/ELA

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TAGS: ECON EINV EFIN ETRD EAGR ENRG PGOV EG
SUBJECT: EGYPT'S ECONOMY: November 2 PRESS ROUND-UP

1.(U) The following are notable economic news stories that appeared over the past week in the Egyptian press: -------------------------------- Mubarak Speech to NDP Conference --------------------------------

2.(U) In a speech to the National Democratic Party (NDP) conference, President Hosni Mubarak laid out his economic agenda for the coming year. Most notably, he called for the construction of nuclear power plants for producing energy. Mubarak also touted the recently announced additional LE10 billion (US$1.83 billion) stimulus package, aimed at improving roads and sanitation, and claimed that Egypt is handling the global economic crisis with its own money, not foreign aid or debt. Finally, Mubarak stressed that Egypt considered water resources to be a matter of national security (Al Ahram, 11.1.2009). -------------------------- Egypt's Poverty Rate Rises --------------------------

3.(U) Minister of Economic Development Osman Mohamed Osman announced that the Egyptian poverty rate recently increased from 19% to 21%. Osman blamed the global financial crisis and the decline in foreign direct investment for the rise in poverty. Egypt's poverty line is calculated based on the costs of basic needs, and those falling below it generally earn US$1 per day or less (Al Masry Al Youm, 10.29.2009). ---------------------------------------- Central Bank Creates New Inflation Index ----------------------------------------

4.(U) The Central Bank of Egypt introduced a new inflation index, derived from the government's current Central Agency for Public Mobilization and Statistics (CAPMAS) index. The new index charts core inflation and strips out the volatile prices of goods such as fruits, vegetables and transportation. Using the new metric, inflation was just 6.3% in September and 5.8% in August 2009, compared to the headline inflation indicator which put inflation at 10.8% in September and 9% in August (Al Mal, Al Alam Al Youm, Al Ahram, 10.26.2009). ------------------------------------ Combating Sea Erosion along the Nile ------------------------------------

5.(U) Minister of Irrigation and Water Resources Nasr Allam announced that the Egyptian General Agency for Coastal Protection has completed its project to mitigate the impact of sea erosion along a five-kilometer stretch of the Nile delta by the city of Rosetta at a cost of LE95 million (US$17.43 million). The work is part of a larger plan to protect a 120-kilometer stretch along the Mediterranean and the Red Sea coasts by 2017 with a total investment of LE1.4 billion (US$260 million) (Al Ahram, Al Shorouk, 10.26.2009). ------------------------- Reduction in Food Exports -------------------------

6.(U)A report by the Export Council for Food Commodities showed that Egyptian food exports fell by LE1 billion (US$183 million) over the first three quarters of 2009, a 16% decrease from the same period last year. Exports of milk products fell by 25% over the period, although sugar exports bucked the trend, increasing by 12% (Al Bursa, 11.1.2009). ------------------------------- WTO Africa Group Meets in Cairo -------------------------------

7.(U) At a gathering of African trade ministers to discuss the Doha Round of the World Trade Organization (WTO) talks, Egyptian Minister of Trade and Industry Rachid Mohamed Rachid gave a speech warning against ignoring developing countries in world trade negotiations, and arguing that African nations should present a united front on WTO issues. Representatives of various African nations at the conference criticized subsidies on American agricultural products, particularly cotton (Al Alam Al Youm 10.29.2009). Scobey

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