EGYPT WEEKLY NEWSLETTER AUGUST, 2014 (4TH QUARTER) CONTENT 1. Political Overview………..........01 2. Economic Overview……..….…..02 3. Banking………………….…………….03 4. Finance.…………………….……..….04 5. Energy………………………………….06 6. Projects……………………..………..07 7. Tourism…………………………..…..07 8. Industry..….………………………….08 9. IT & Telecom……..…..…………...08 10. Building Materials……………..09 11. Real Estate………………………...09 12. Laws & Regulations…………...09 POLITICAL OVERVIEW U.S. backs off statement that Egypt, UAE were behind Libya air strikes Source: Egypt.com, August 27, 2014 The U.S. State Department on Tuesday backed off an earlier statement that Egypt and the United Arab Emirates were behind air strikes on Islamist militants in Libya. At a regular State Department briefing, spokeswoman Jen Psaki said: "We understand there were air strikes undertaken in recent days by the UAE and Egypt" in Libya. At the Pentagon, spokesman Rear Admiral John Kirby also said the two countries were believed to be involved in the strikes but declined to give details. However, late on Tuesday the State Department issued a statement saying the comment on Libya was "intended to refer to countries reportedly involved, not speak for them." Egypt's Sisi to head to U.S. in September Source: Al-Arabia, August 28, 2014 Egyptian President Abdel-Fattah al-Sisi will visit the United States in September to attend a meeting of the U.N. General Assembly, his first trip there as the country's head of state, the country's official news agency reported Wednesday. MENA said Sisi also will attend a United Nations environmental summit on Sept. 25 and deliver a speech. It added that he is expected to hold meetings with other world leaders - but it did not say if he'll meet with U.S. President Barack Obama. Egypt's relations with U.S. have been Egypt Weekly Newsletter 1 Thai Trade Center, Cairo August, 2014 (4th quarter) Sherif Yehya strained since the downfall of one-time ally Hosni Mubarak in the country's 2011 uprising. U.S. has refused to fund all of the $1.5 billion in annual military and economic aid that Washington usually sends to Cairo after the military ouster of Islamist President Mohammed Morsi last year. Sisi reportedly turned down a previous invitation to attend an African-American summit in the U.S., with Egyptian daily newspapers saying it was a reaction to receiving a belated invitation from the White House. Prime Minister Ibrahim Mahlab represent Sisi at the summit. The U.S. has supported Egypt's role in mediating the Israeli- Palestinian conflict. ECONOMIC OVERVIEW Egyptian pound steady against the dollar at central bank sale Source: Aswat Masria (Egyptian Voices), August 26, 2014 CAIRO, Aug 27 (Reuters) - Egypt's pound held steady at a central bank dollar sale on Wednesday, with the bank saying it sold $37.6 million at a cut-off price of 7.1401 pounds per dollar, unchanged from Monday's rate. The rate for dollar sales has stayed in a very tight range since the beginning of June, after the bank allowed the pound to weaken in May. The central bank offered $40 million on Wednesday. The rates at which banks are allowed to trade dollars are determined by the results of central bank sales, giving the bank effective control over official exchange rates. Egypt buys 175,000 tonnes Russian and Romanian wheat Source: Egypt Independent, August 26, 2014 Egypt's state grain buyer, the General Authority for Supply Commodities (GASC), on Tuesday bought 175,000 tonnes of Russian and Romanian wheat for shipment on Sept. 21-30, GASC and traders said. Two traders gave the following breakdown of the purchase on a cost and freight basis: 60,000 tonnes of Romanian wheat from Invivo at $257.77 a tonne 60,000 tonnes of Russian wheat from Bunge at $259.29 a tonne 55,000 tonnes of Russian wheat from Bunge at $259.43 a tonne (Reporting by Yasmine Saleh and Michael Hogan; editing by Keiron Henderson) Finance Minister: Real estate tax bills sent, challenges within 60 days Source: Egypt Daily News, August 27, 2014 Finance Minister Hani Qadri Demian said on Sunday that the Real Estate Tax Authority began sending notification letters for the taxable real estate that was counted and evaluated according to the market value, pointing out that the tax would be enforced as of 1 July 2013. The minister added in a statement that real estate owners can challenge the tax assessment within 60 Egypt Weekly Newsletter 2 Thai Trade Center, Cairo August, 2014 (4th quarter) Sherif Yehya days of receiving notice for the appeal committees to consider within 30 days. Finance Minister Advisor Tarek Farag explained that property built on farmland in accordance with regulations would be exempted from taxes on agricultural land so as to avoid double taxation. As for food security projects built on agricultural land, such as poultry barns, warehouses and cattle pens, Farag said these would be subject to taxes on agricultural land and not on real estate. He said the tax can be paid on two six-month installments, urging taxpayers not to be late in paying so as to avoid fines. The Suez Canal could raise Egypt’s future world trade income by 22% Source: Ahramonline, August 25, 2014 Suez Canal Authority Chairman Mohab Mamish said Egypt must take advantage of increased trade with European markets when rising economic giants like China, India and the countries of Southeast Asia come to 'invade' the European markets in 2020. “We must keep up with developments and take advantage of the trade that passes through the canal,” he said. At a conference explaining the Suez Canal Development Project on Tuesday, Mamish said the Suez Canal world trade income is currently 10 percent. “This can rise to 22 percent after the completion of the project,” he said. Meanwhile, military spokesperson Mohamed Samir said the total volume of drilling so far reached 17.5 million cubic meters, with 52 companies and two battalions for road construction. BANKING Egypt's central bank expected to keep main rates on hold Source: Yahoo, August 28, 2014 Egypt's central bank is expected to keep interest rates unchanged at a monetary policy meeting on Thursday, a Reuters survey shows, as officials seek to balance the need to stimulate the economy while curbing high inflation. Egypt's economy has endured more than three years of political instability after the overthrow of autocrat Hosni Mubarak in 2011 deterred tourists and foreign investors. The bank is under pressure to keep interest rates high to attract funds out of foreign currencies and into the Egyptian pound. In its last monetary policy meeting Egypt kept its deposit rate at 8.25 percent and its lending rate at 9.25 percent. It also kept its discount rate and the rate it uses to price one-week repurchase and deposit operations at 8.75 percent. Five of six economists surveyed by Reuters expect the bank to keep rates unchanged on Thursday, while one expected it to cut them by 50 basis points. "The central bank cut interest rates three times and we haven't seen the impact on credit growth, so they might want to take a breather. Inflation is decelerating but still remains high," said EFG-Hermes economist Mohamed Egypt Weekly Newsletter 3 Thai Trade Center, Cairo August, 2014 (4th quarter) Sherif Yehya Abu Basha. Egypt's annual urban inflation rate slowed to 11.4 percent in January from 11.7 percent in December. Core annual inflation slid to 11.7 percent in January from 11.9 percent in December. Supported by more than $12 billion in aid from Gulf states, Egypt launched two stimulus packages worth around 30 billion Egyptian pounds ($4.3 billion) each to spur growth in its ailing economy. Unlike other analysts surveyed by Reuters, Jason Tuvey, assistant economist at Capital Economics, expects the central bank to cut rates on Thursday by 50 basis points as the Egyptian economy continues its recovery. "Aid from the Gulf means that the central bank doesn't need to keep interest rates high in order to attract foreign capital inflows," Tuvey said. FINANCE $5.4bn World Bank financing for existing projects in Egypt: Regional Director Source: Bloomberg, August 26, 2014 The total in World Bank (WB) funding across 25 projects in Egypt has now reached $5.4bn, according to the WB Country Director for Egypt, Yemen, and Djibouti Hartwig Schafer. WB-financed projects in Egypt focus on several areas including: managing and developing integrated irrigation systems; improving education; developing wind energy and electric power stations including the Ain Sokhna power plant; controlling pollution; and building infrastructure for integrated sewage systems. These projects also include a plan to develop a new terminal at the Cairo airport, restructure rail lines, and modernise irrigation at farms. Within the WB grant system, there are 54 projects totalling $202m. On Tuesday, the Ministry of International Cooperation signed an agreement with the WB to provide the Egyptian Financial Supervisory Authority (EFSA) and the Egyptian Environmental Affairs Agency (EEAA) with grants worth $4m and $8.1m respectively. Schafer has said that up to 60% of the WB’s funding portfolio for projects to be carried out in Egypt is directly focused on providing support to energy projects. The funding will be given especially to developing new and renewable energy. The Egyptian government intends to finalise a five-year plan for WB-financed projects by the end of this year, according to the Minister of International Cooperation Najla Al-Ahwani. According to Al-Ahwani, the WB has always been a major funder for development projects in Egypt and hopes to continue playing this role. She said that she hopes WB projects will serve Egyptian business development in the coming period, following the development goals set out by the government.