Tuesday,21 August, 2018
Current issue | Issue 1271, (19-25 November 2015)
Tuesday,21 August, 2018
Issue 1271, (19-25 November 2015)

Ahram Weekly


Al-Ahram Weekly

S&P cuts Egypt’s outlook

STANDARD and Poor’s (S&P) cut its outlook on the Egyptian economy from positive to stable, on the back of expectations that deficits in the country’s balance of payments will persist in light of reduced Gulf aid.

Meanwhile, the agency kept its long-term credit rating at B- as Egypt’s economic recovery is expected to remain gradual and depends on maintaining security and political stability.

“The stable outlook reflects our expectation that Egypt will largely remain politically stable, its economy will continue to progressively grow in the face of important macroeconomic headwinds, and that fiscal deficits will improve but remain at high levels,” S&P analysts said in the report. “Economic recovery is supported by improved political conditions, a recovery in construction, manufacturing, services and tourism.”

The report expected Egypt’s economy to have grown by 4.2 per cent in 2015, almost twice its average growth over the previous three years.

Arabtec pursues new investment

ARABTEC, the Dubai-based construction company, has submitted a proposal to the Egyptian government to build 13,000 homes. Chairman Mohamed Thani Murshed Al-Rumaithi told Reuters this week that he expects the Egyptian government to accept the new proposal.

The proposal is unrelated to the company’s 2014 memorandum of understanding (MoU) to build one million homes in Egypt by 2020. The firm and the Egyptian Ministry of Housing have, however, disagreed on many details and failed to set the final terms for the project.

Arabtec has been facing many financial problems as well as changes in its administration. The company’s losses over the past four quarters reached 2.06 billion dirhams ($560.8 million) as costs rose. Share values have fallen by 85 percent from a May 2014 peak, after a number of its provisional agreements failed to materialise.

“2015 will be a very, very tough year,” said Rumaithi, who became chairman in May. “That’s the reality because of the losses the company has faced.”

Slight increase in unemployment

THE UNEMPLOYMENT rate inched up by 0.1 per cent to 12.8 percent in the third quarter of 2015 compared to the previous quarter, but it was lower than the 13.1 per cent rate in the corresponding period of last year.

Egypt has been struggling since the 2011 Revolution to achieve a growth rate that can provide new job opportunities. President Abdel-Fattah Al-Sisi has pledged to reduce unemployment to ten percent over the next five years — a target that will require much higher levels of economic growth.

According to the Central Agency for Public Mobilisation and Statistics (CAPMAS), Egypt’s labour force grew by 218,000 people in the third quarter to reach about 28 million.

Meanwhile, unemployment among youth remained stubbornly high at almost twice the national rate. Unemployment among those between the ages of 15 and 29 increased to 27.4 percent in the third quarter, from 26 per cent in the previous quarter.

OTMT acquires Beltone

THE EGYPTIAN Stock Exchange executed the mandatory tender offer submitted by Orascom Telecom Media and Technology Holding (OTMT) and Act Financial to acquire Beltone Financial Holding. The buy offer was carried out on 158.5 million shares at LE4 each.

Earlier, OTMT announced that a majority of Beltone Financial Holding shareholders, representing 97.4 per cent, have responded positively to the tender offer.

Last month, OTMT and Act Financial said they were seeking to acquire 100 percent of Egypt-based financial services company Beltone, in a transaction valued at LE650 million.

OTMT is a holding company with investments in media and technology. Its CEO, Naguib Sawiris, had previously failed to acquire EFG Hermes, the largest investment bank in the Middle East, through his New Egypt Investment Fund. Act Financial is an investment bank that was founded earlier this year.

More gas in the pipeline

EGYPT will cooperate with Jordan and Iraq in the oil and gas sector. Petroleum Minister Tarek Al-Molla signed an MoU on Sunday with his Jordanian and Iraqi counterparts to boost cooperation in the oil and gas sector between the three countries, in light of Iraq’s surplus crude oil and natural gas. The agreement was signed in the Jordanian capital Amman.

Al-Molla said the ministers agreed to supply Egypt and Jordan with surplus Iraqi crude oil and natural gas, in addition to exporting Iraqi gas via Egypt and Jordan through the Arab Gas Pipeline, which links Egypt and Jordan.

They also agreed to determine the appropriate mechanism to export Iraqi crude oil to Egypt and Jordan through a new pipeline connecting the Iraqi city of Haditha to the Jordanian port of Aqaba.

Also last week, Al-Molla signed five new oil and gas exploration agreements with international companies, worth at least $2.2 billion in investments. He said that four of the five deals were signed with Italian energy giant Eni, with investments worth some $2 billion. The deals are the outcome of agreements signed at Egypt’s economic conference held in Sharm El-Sheikh in March.

The biggest deal is for exploration in the Gulf of Suez and Nile Delta, with an investment of $1.5 billion, while the second is in northern Port Said, in the Mediterranean Sea, with an investment of $500 million.

Egypt, once a net energy exporter, became a net importer in recent years, amid reduced local production and increased consumption. The recent discovery of the massive offshore Zohr field is expected to boost production in the coming years.

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