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Cablegate: Egypt's Economy: January 11 Press Round-Up

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TAGS: ECON EINV EFIN ETRD EPET PGOV EG
SUBJECT: EGYPT'S ECONOMY: January 11 PRESS ROUND-UP

1.(U) The following are notable economic news stories that appeared over the past week in the Egyptian press: --------------------------------------------- --------- GOE Increases Third Stimulus Package to LE11.2 Billion --------------------------------------------- ---------

2.(U) Prime Minister Ahmed Nazif announced in a speech to the People's Assembly on January 5 that the GOE will increase its third stimulus spending package from LE10 billion (US$1.84 billion) to LE11.2 billion (US$2.06 billion). The additional LE1.2 billion will be allocated along the same lines as the previously committed LE10.0 billion, going to infrastructure projects including sanitation and road building (Al Ahram, 1/6/2010). --------------------------------------------- ---- Trade with Ethiopia Seen As Key to Water Security --------------------------------------------- ----

3.(U) In the wake of Prime Minister Ahmed Nazif's visit to Ethiopia last month, several Egyptian business leaders called for increasing the trade volume between Egypt and Ethiopia, which currently stands at $51 million annually. Mohamed El Menoufy, the chairman of Sixth of October Investors Association, said that increasing trade with Ethiopia was essential to preserving Egypt's national water security, given Ethiopia's location in the Nile Basin. Ambassador Gamal Bayoumy, the Secretary General of the Union of Arab Investors, called for establishing an Egyptian industrial zone in Ethiopia, while Hamed Al Shiaty, the head of the Agricultural Committee in the Egyptian Businessmen Association, voiced support for increasing Egypt's imports of Ethiopian meat and building roads between Egypt, Sudan and Ethiopia (Al Mal, 1/5/2010). -------------------------------------- Warning over Rising Inflation and Debt --------------------------------------

4.(U) Jawdat Al Malat, the head of Egypt's Central Auditing Organization, warned against the negative impacts of rising inflation rates, with annual headline inflation currently at 13.3%. Al Malat called on the GOE to take action to mitigate the impacts of rising consumer prices. Al Malat also warned against the mounting debt owed by the GOE to local banks, which currently amounts to LE 9,526 (US$1,751) per capita (Al Ahram, Al Masry Al Youm, 1/5/2010). ---------------------------------- GOE Extends Customs Duty Decreases ----------------------------------

5.(U) Minister of Trade and Industry Rachid Mohamed Rachid announced that the temporary decrease or exemption of duties on capital goods has been extended through the first six months of 2010. The measure, which temporarily lowered or eliminated customs duties on nearly 250 items, was first imposed as part of the GOE's stimulus plan of February 2009. Rachid said he was extending the measure because the effects of the global economic crisis are still being felt in Egypt (Al Masry Al Youm, 1/4/2010). ----------------------------------- GOE Considering Importing Iraqi Gas -----------------------------------

6.(U) Al Masry Al Youm newspaper reported on January 6 that Minister of Petroleum Sameh Fahmy was considering importing natural gas, particularly from Iraq, in order to expand energy-intensive domestic industry. Such a move would mark a major departure from Egypt's current role as a natural gas exporter. On January 9, Fahmy responded to the report by saying that no decision on gas imports had been made, and that the idea is still being studied (Al Masry Al Youm, 1/6/2010, Al Mal, Al Ahram, 1/10/2010). SCOBEY

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