VZCZCXYZ0005
RR RUEHWEB

DE RUEHEG #0524/01 0850813
ZNR UUUUU ZZH
R 260813Z MAR 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 2006
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS CAIRO 000524 
 
SIPDIS 
 
STATE FOR NEA/ELA 
 
E.O. 12958:  N/A 
TAGS: ECON EPET EFIN EAGR ETRD ENRG PGOV EG
SUBJECT:  EGYPT'S ECONOMY:  WEEKLY PRESS ROUND-UP 
 
REF:  CAIRO 209 
 
¶1. (U) The following is a summary of notable economic news stories 
that appeared over the past week in the Egyptian press: 
 
Export Promotion 
---------------- 
¶2. (U) Minister of Trade and Industry Rashid announced the Export 
Development Bank of Egypt would spend an additional LE 2.1 billion 
($380 million) to promote exports.  Under the ministry's plan, five 
new export sectors will benefit from the additional funds.  (Al 
Masry Al Youm, March 14) 
 
Agriculture 
----------- 
¶3. (U) According to the head of the Principal Bank for Development 
and Agricultural Credit (PBDAC), the bank is implementing the 
presidential decree forgiving 50% of the debt of 130,000 small 
farmers.  The program will be supported by a government capital 
injection into the bank of LE 850 million ($152 million).  (Al Masry 
Al Youm, March 13). 
 
¶4. (U) PBDAC is also considering setting up a new company, with 10% 
PBDAC ownership, to supply agricultural products (fertilizer and 
machinery) to farmers.  The goal would be to separate PBDAC's 
banking and non-banking services.  (Al Mal, March 16) 
 
¶5. (U) The Ministry of Agriculture has allocated 200,000 acres for 
industrial agricultural investment, including 60,000 acres in Minya 
and 140,000 acres in Sinai and Tushka.  On March 18, Minister of 
Agriculture Abaza said further discussions with the governor were 
required.  Land in Sinai and Tushka will be available once the 
Ministry of Irrigation and Water Resources supplies these areas with 
water. (Al Masry Al Youm, March 19) 
 
Exchange Rate 
------------- 
¶6. (U) The value of the Egyptian pound continues to slide, reaching 
a low of 5.72 Egyptian pounds per US dollar, the lowest point since 
July 2007.  Some Egyptian bankers have attributed the currency's 
weakness to increased demand for foreign currency, while exchange 
bureaus indicated that holders of foreign currencies are postponing 
sales in anticipation of further weakening of the pound.  (Beltone, 
March 16). 
 
¶7. (U) On March 15, the Central Bank of Egypt (CBE) intervened to 
slow the weakening of the Egyptian pound against the dollar, 
bringing the exchange rate back up by 6 piasters to LE 5.64/US$1.00. 
 According to the press, the intervention was intended to undermine 
speculative activity.  The exact extent of the intervention has not 
been made public, though most recent press and analyst reporting 
suggests that the intervention was no more than US$100 million 
rather than the US$1 billion intervention originally reported. 
(Beltone, March 16 and March 22). 
 
Water Resources 
--------------- 
¶8. (U) Disputes between farmers and the new Minister of Irrigation 
and Water Resources, Dr. Mohamed Nasr-Eldin Allam, intensified in 
response to reports that Allam planned to alter the pricing 
structure for irrigation water. Over 500 farmers' associations 
requested a meeting with the minister to discuss his intentions to 
charge farmers by consumption brackets for their use of irrigation 
water. The minister had reportedly submitted a study to Prime 
Minister Nazif explaining his economic program of managing 
irrigation water, reducing consumption, and expanding the cultivated 
land area. Reports by the Water Research Institute indicate Egypt is 
suffering from a shortage in water, leading the government to 
allocate EGP10 billion ($1.8 billion) to implement water and 
wastewater programs to rationalize use of water through 2017 (Al 
Wafd, March 16). 
 
Oil Discoveries 
--------------- 
¶9. (U) On March 15, resident Mubarak visited one of the newly 
discovered oil fields in the Western Desert at a site operted by 
Badr El-Din Petroleum Co. (Bapetco).  Thenew field is expected to 
produce 25,000 BPD and 30 million cubic meter of natural gas. 
During th visit, Petroleum Minister Fahmi indicated that Egypt's 
total production of crude oil, condensates ad natural gas has 
increased to 1.8 million equivlent barrels per day in 2008/2009 (Al 
Ahram, Al khbar and Al Masry Al Youm, March 15). 
 
Suez Canl 
---------- 
¶10. (U) The Suez Canal Authority (CA) indicated on March 17 that it 
will complete ts expansion to a depth of 66 feet by the end of2009, to enable it to accommodate 64 percent of th world's oil 
tanker fleet and about 99 percent o container carrying vessels (Al 
Ahram). 
 
Electricity 
----------- 
¶11. (U) On Sunday March 15, Prime Minister Nazif witnessed the 
signing of a new agreement with the World Bank and the African 
Development bank for a $1.05 billion loan for the establishment of a 
new 1,300-megawatt electrical power plant at El Ain El Sokhna on the 
Gulf of Suez. The total cost for the project is about $2.2 billion 
of which $1.5 million will be paid for in dollars and the remaining 
$700 million in Egyptian currency (Al Ahram, March 15). 
 
Science and Salaries 
--------------------- 
¶12. (U) Researchers and professors at more than 2000 government 
research centers and institutes continued their protest against the 
government and Minister of Higher Education and Scientific Research, 
Dr. Hany Hilal, because they did not receive the same salary 
increases received by their counterparts in government universities. 
(AMAY). 
 
Telecom 
------- 
¶13. (U) Telecom Egypt, the country's monopoly fixed line operator, 
indicated that its fourth quarter net profit plunged 27.7% to LE601 
million (US$107.3 million) from LE 831 million (US$148.4 million) in 
the same period of 2007.  Earnings per share fell 45% to LE 0.21 
(US$0.0375) from LE 0.37 (US$0.067) in the fourth quarter of 2007. 
The company's net additions of fixed-line subscribers during the 
fourth quarter reached 377,000, bringing the number of total 
subscribers to 11.7 million.  Income from Telecom Egypt's investment 
in Vodafone Egypt, of which it holds a 45% stake, reached LE 1.4 
billion (US$250 million) in 2008 up from LE 1.2 billion (US$214 
million) in 2007 (Dow Jones Newswires). 
SCOBEY