Briefs

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French connection

Five protocols and agreements were signed this week with France during French Prime Minister François Fillion's visit to Egypt. The agreements include a 200 million euro soft loan to finance the second phase of Egypt's third underground line. Additonal French funding will be made available to rehabilitate the irrigation network west of the Delta and combatting environmental polluton emanting from industrial facilities.

Moreover, internal trade was the focus of one of the agreements. Both sides will work jointly to develop the infrastructure and technical know- how of Egypt's internal trade sector. The MOU provides support for all bodies working within internal trade, particularly the newly formed Internal Trade Authority, which will be in charge of developing the infrastructure and overseeing of the internal market. France is one of Egypt's main trade partners. Moreover, it has 15 billion euro worth of investments in Egypt.

Which way will it be?

EXPECTATIONS are high that the Central Bank of Egypt's (CBE) Monetary Policy Committee, scheduled to meet today, will lower its overnight deposit and lending on the back of improved inflation figures. Farouk El-Okda, CBE governor, had said earlier this week that Inflation is expected to drop to an "acceptable" rate in Egypt in January. This has raised hopes that the CBE would lower its rates by 25 or 50 basis points. The CBE's monetary policy attempts to keep inflation at arms' length, lowering rates only if inflation drops. The latest figures show inflation in the whereabouts of 20 per cent, compared to 21.5 per cent around eight weeks ago.

The last time the MPC met 6 November, it kept the overnight deposit and lending rates unchanged at 11.5 per cent and 13.5 per cent. At that time, the CBE had chosen to keep the rates without modification and it said that "while inflation is still high, the pace of monthly acceleration is moderating."

Off-balance BoP

THE BALANCE of payments (BoP) surplus tightened during the first quarter of the fiscal year 2008-2009 to reach $1.2 billion compared to $1.7 billion the corresponding period of last year.

The retreat came on the back of a 35 per cent increase in the import bill, to exceed exports, which itself soared by 36 per cent over the three- month period by $7 billion.

Foreign direct investments (FDIs) recorded a 44.3 per cent drop reaching $1.7 billion during the quarter as the bulk of FDI comes from the US and EU, whose economies were the worst hit by the ongoing financial crisis. Moreover, the 40 per cent decline in oil prices, resulted in a four per cent retreat in transfers and remittances as the majority of Egyptian expatriates work in the oil- producing GCC economies.

Only the tourism sector and the Suez Canal reflected some resilience during the first quarter, registering growth rates of 11 and 20 per cent respectively.

The chosen one

US FIRM Bechtel Power has been awarded an LE1 billion contract to oversee the construction of Egypt's first nuclear power station. Bechtel Power has been chosen among seven other applicants to take over the 10-year contract, by a committee made up of representatives of the Council of State, the Ministry of Finance, the Nuclear and Water Agencies and the Holding Company for Electricity. The company was seen to have made the best technical offer at the lowest price. The offers of all the applicants had been fit technically, but Bechtel's edge was in its financial offer.

It will be providing consultation services, namely evaluating and selecting from different nuclear energy technologies on the international market, choosing the site for the plant and applying international safety standards as well as training. Before a contract is signed, the government has yet to sit with the company to discuss in detail the articles of the agreement. Bechtel Power is one of six units run by Bechtel Corporation. It specialises in providing services in the area of electric generation using fossil and nuclear fuels.

The construction of Egypt's first nuclear plant comes on the back of calls by President Hosni Mubarak last year.

Still free

PORT Said's free zone status has been extended for an additional three years. In 2002, the Cabinet had issued a decree putting an end to the free-zone status that Port Said had enjoyed since 1976. The decree was issued at the time to safeguard the local garment and textile industry against cheaper, albeit often smuggled foreign products. However, following widespread demonstrations in 2002, President Hosni Mubarak agreed to phase in the lifting of free-zone status. The five-year grace period was intended to allow time for the city to adjust and for industries to be created to help create a new livelihood for its citizens who are mostly dependent on commercial activity. This week Mubarak extended the transitional period for an additional three years, giving the city more time to get its act together. During that time, traders will gradually see their import quotas reduced.