VZCZCXYZ0004
RR RUEHWEB

DE RUEHEG #0548/01 0901201
ZNR UUUUU ZZH
R 311201Z MAR 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 2056
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS CAIRO 000548 
 
SIPDIS 
 
STATE FOR NEA/ELA 
 
E.O. 12958:  N/A 
TAGS: ECON EINV EFIN EAGR ETRD ENRG PGOV EG
SUBJECT:  EGYPT'S ECONOMY:  MARCH 31 WEEKLY PRESS ROUND-UP 
 
REF:  CAIRO 533 
 
¶1. (U) The following are notable economic news stories that appeared 
over the past week in the Egyptian press: 
 
 
Investment Minister on the Egyptian Economy 
------------------------------------------ 
 
¶2. (U) Minister of Investment Mahmoud Mohieldin announced that 
Egypt's real GDP growth is expected to be between 3% and 4% in 
FY2008/2009, with growth being generated from housing, 
infrastructure and agriculture.  He stated that, though the GOE 
expects this level of growth, it is implementing an incentive and 
fiscal stimulus package that targets 5% growth.  According to data 
from the Ministry of Economic Development, infrastructure makes up 
26% of GDP while non-petroleum manufacturing accounts for 12% of 
GDP. Real estate and construction make up 5% of GDP. The 
manufacturing sector, particularly exporters, will be the hardest 
hit by the economic slowdown.  Tourism, Suez Canal revenues, and 
workers' remittances will also be negatively affected, he said. The 
effect of this will lead to a widening of the current account 
deficit, which has reached 2% to 3% of GDP. On a positive note, 
inflation has dropped to 14% and "it is expected to be single digits 
in the forthcoming weeks and months. It is very likely that for the 
whole year, next year, it is going to be in single digits," 
Mohieldin said. (Al Ahram, March 22) 
 
 
Extending Barriers on Rice Exports 
-------------------------------------- 
 
¶3. (U) The Ministry of Trade and Industry will extend limits on rice 
exports until October 1, 2009. Traders who import rice for the 
government for the ration card system will be allowed to export the 
same quantity, while other traders will be allowed to export any 
rice surplus that exceeds domestic demand, after paying a duty of 
EGP1000(US$178)/ton.  "The decision is intended to preserve the 
stability of prices in the local market," stated Minister of Trade 
and Industry Rachid M. Rachid. The ban had been due to expire in 
April 2009. The Ministry of Trade and Industry had imposed an export 
ban on rice in March 2008 for six months and renewed the ban in 
October 2008, as rising rice prices abroad led to a shortage in rice 
locally, which contributed to a spike in food inflation. Egypt 
produces about 4.6 million tons of white rice a year, and domestic 
consumption is usually 3.2 million tons, leaving a surplus of 1.4 
million tons for export. (Al Ahram, March 22) 
 
 
Unemployment 
------------ 
 
¶4. (U) The Central Agency for Public Mobilization and Statistics 
(CAPMAS), the GOE's official statistics agency, announced that 
88,000 Egyptians lost their jobs in the last 3 months, raising 
unemployment to 8.8%, a .2% increase over the same period last year. 
(NOTE: CAPMAS defines the unemployed as those in the labor force who 
are actively searching for jobs. This figure does not capture 
Egypt's chronic underemployment. END NOTE.) CAPMAS announced that 
the total number of unemployed in Egypt stands at 2.2 million. Other 
non-governmental sources assert that the real number is higher than 
what the government is willing to publicly admit (Al Masry Al Yom, 
March 23). Naglaa Al Ahwany of the Egyptian Center for Economic 
Studies warned that in the next six months, remittances of Egyptians 
working in the Gulf will decline to $6 billion compared to $8 
billion in 2007/2008. Al Ahwany expects unemployment rates to rise 
to 9.5% in 2009, compared to 8.6% in 2008 (Nahdet Masr, March 23). 
 
 
Water 
----- 
 
¶5. (U) Minister of Water Resources and Irrigation Dr. Mohamed Nasr 
Eddin Allam indicated that food security in Egypt is threatened as 
the per capita availability of water has shrunk to 650 cubic meters 
per year. (NOTE: The water poverty limit is defined as 1,000 cubic 
meters of water for food production per person per year. END NOTE.) 
Allam also said water sanitation services cover no more than 50% of 
Egyptian governorates. (March 23, Al Masry Al Yom) (reftel) 
 
 
Toshka 
------ 
 
¶6. (U) The Central Auditing Agency (CAA) published a report about 
cost overruns and poor planning related to the Toshka project to 
create a new urban center in the Western Desert.  It indicates that 
as of July 2008, the total cultivated area was 13,200 acres, 
representing 5.4% of the total 243,000 acres allocated to investors. 
 So far, the project has cost LE 5.6 billion (US$1 billion). The 
operational test of the 18 pumps of the Mubarak Power Plant failed, 
delaying the delivery the final mechanical and electrical works. 
(March 26, Al Masry Al Yom) 
 
SCOBEY