Briefs

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Economic briefing

EGYPT'S rising inflation rate will start to decrease by the end of this year, Minister of Finance Youssef Boutros Ghali told represenstatives of the World Bank and IMF last week. Ghali, speaking at the semi-annual meetings of the two international bodies in Washington, DC, stressed that the main reasons for the increase in interest rates was the rise in international energy prices and the effect of bird flu on the local economy. The low supply of certain agricultural products was also a temporary shock to the economy which will soon disappear, he asserted.

The minister boasted improving economic indicators, especially the seven per cent growth rate which is expected to increase in the coming years, since it is based on sound economic factors, an increase in foreign direct investments and a hike in exports and local consumption. According to Ghali, the revenues of offering the third mobile licence and selling Bank of Alexandria will lower this year's budget deficit to 5.5 per cent of GDP, compared to nine per cent in 2006.

Since next year's budget will not have these singular revenues, the deficit is expected to rise by one per cent to reach 6.5 per cent. This will still be in line with the government's plan to lower the deficit by one per cent every year.

Ghali added that Egypt asked for IMF technical help in some structural reforms, on top of which is helping apply the unified treasury law, tax management reform and the real estate law which will reduce taxes on real estate from 40 to 10 per cent.

No gas cartel

THE GAS Exporting Countries Forum (GECF) convened its sixth ministerial meeting on 9 April in Doha, Qatar. Discussions focussed on exchanging views on technical issues, deepening cooperation among gas producing countries and working towards creating stability in the fuel market. Egypt's Minister of Petroleum Sameh Fahmi urged participants to boost cooperation between gas consuming and producing countries to create a balance between supply and demand in light of growing demands on gas.

"Providing the necessary investments and funding, as well as creating appropriate mechanisms will guarantee good prices of natural gas on the world market," Fahmi told the forum. Egypt presented a study of growing international gas demands until 2020.

The 16-member bloc, including Egypt, Russia, Iran, Qatar, Venezuela, Malaysia and Algeria, controls 73 per cent of the world's total gas reserves and 42 per cent of production. The GECF is an informal structure that was launched in Iran in 2001, whose members work towards maximising revenues and expanding cooperation in the field of producing hydrocarbons.

Participants at the Doha meeting promptly dismissed the possibility of creating a gas cartel, similar to that of the Organisation for Petroleum Exporting Countries (OPEC) and stressed the fact that the forum was mainly concerned with exchanging views and deepening coordination among member countries. The notion had earlier alarmed world leaders, mainly in the EU and US, who were ready to react if a body was formed to control natural gas output or prices.

According to the International Energy Agency, world demand for liquefied natural gas (LNG) will increase to 467 billion cubic metres by 2010, compared to the current 246 billion cubic metres.

Talks with Japan

STATE Minister for International Cooperation Faiza Abul-Naga met the new Japanese ambassador to Cairo Kaoru Ishikawa this week . The meeting comes ahead of Japanese Prime Minister Shinzo Abe's anticipated visit to Egypt in early May. "The awaited visit of the prime minister, accompanied by 180 businessmen and chairmen of major companies, gives momentum to Egyptian-Japanese economic cooperation," stated Abul-Naga.

Among the topics discussed were the implementation of the Grand New Egyptian Museum, and the establishment of the Egyptian-Japanese University for Specialised Sciences and Technologies. The university will be located at the Industrial Zone in Borg Al-Arab, on the North Coast.

Japanese grants to Egypt since 1973 amount to $1.291 billion, and have funded several projects including the Cairo Opera House, the Mubarak-Al-Salam Bridge over the Suez Canal, and the Children's Abul-Rish Hospital, among many other infrastructure ventures. Egypt received some $3.782 billion in Japanese loans since 1974 to finance such endeavours as deepening and widening the course of the Suez Canal, the power generation plant in Zaafarana and developing the Borg Al-Arab airport.