VZCZCXYZ0000
RR RUEHWEB

DE RUEHEG #2120 3131356
ZNR UUUUU ZZH
R 091356Z NOV 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 4171
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS CAIRO 002120 
 
SIPDIS 
 
STATE FOR NEA/ELA 
 
E.O. 12958:  N/A 
TAGS: ECON EINV EFIN ETRD ENRG PGOV EG
SUBJECT: EGYPT'S ECONOMY: November 9 PRESS ROUND-UP 
 
¶1. (U) The following are notable economic news stories that appeared 
over the past week in the Egyptian press: 
 
---------------------------------------- 
The Central Bank Ends Interest Rate Cuts 
---------------------------------------- 
 
¶2. (U) The Monetary Policy Committee of the Central Bank of Egypt 
decided during its November meeting to keep interest rates unchanged 
following six consecutive cuts earlier this year. The committee 
based its decision on rising inflation, a trend which is expected to 
continue due to rising demand for food with the upcoming Eid al-Adha 
feast. (Al Mal, Al Alam Al Youm, 11/8/2009). 
 
-------------------------------------------- 
GOE to Propose Third Fiscal Stimulus Package 
-------------------------------------------- 
 
¶3. (U) The Government of Egypt will propose a new draft bill for a 
third fiscal stimulus package that will amount to LE10 billion 
(US$1.85 billion) to finance water and wastewater projects. This new 
outlay is in addition to an original LE15 billion (US$2.74 billion) 
stimulus package passed in FY 2008/09, and a second stimulus bill in 
the FY 2009/10 budget to finance infrastructure projects, which 
amounted to LE8 billion (US$1.48 billion) (Al Ahram, 11/5/2009). 
 
--------------------------------------------- ------- 
Egypt and China Pledge Expanded Economic Cooperation 
--------------------------------------------- ------- 
 
¶4. (U) A bilateral Egyptian-Chinese summit occurred amid a wider 
China-Africa economic summit being held in Sharm al-Sheikh. The 
bilateral summit included discussions on Chinese projects in the 
Gulf of Suez and increasing the trade volume between Egypt and 
China, which currently exceeds US$6 billion annually. Prime Minister 
Ahmed Nazif signed four cooperation agreements between the two 
countries in the areas of investment, customs, trade and culture. In 
an earlier meeting, Minister of Investment Mahmoud Mohieddin 
discussed developing the special Economic Zone in northwest Gulf of 
Suez with the head of the China Development Bank in Egypt  (Al 
Ahram, Al Akhbar, Al Masry Al Youm, 11/5/2009, 11/8/2009). 
 
---------------------------------- 
Foreign Currency Deposits Decrease 
---------------------------------- 
 
¶5. (U) The Central Bank of Egypt (CBE) reported LE884 million 
(US$163.7 million) in foreign currency deposits in August, a 0.5% 
decrease from July. The Al-Mal newspaper attributed lower foreign 
deposits to the declining value of the US Dollar and decreased 
exports (Al Mal, 11/5/2009). 
 
--------------------------------- 
Suez Canal Receipts Increase 4.2% 
--------------------------------- 
 
¶6. (U) According to the Suez Canal Authority, Suez Canal revenues 
increased by 4.2% during the month of October reaching US$399 
million, up from US$382 million in September.  Despite the recent 
increase, overall receipts are still down by 7.2% since the start of 
the global financial crisis in September 2008, the Suez Canal 
Authority reports (Al Mal, Al Alam Al Youm, Al Shorouk 11/5/2009, 
11/8/2009). 
 
--------------------------------------------- --------- 
GOE Will Not Raise Industrial Energy Prices Until 2011 
--------------------------------------------- --------- 
 
¶7. (U) Minister of Trade and Industry Rachid Mohamed Rachid said the 
government would not raise energy prices on the industrial sector 
until 2011. In 2008, the GOE detailed a plan to gradually raise 
energy prices on industry, but has now put the plan on hold. The 
World Bank recently called on Egypt to increase its energy prices to 
bring them closer to international standards, but Rachid argued that 
raising prices on producers would be an undue burden during the 
economic crisis (Al Masry Al Youm, 11/8/2009). 
 
SCOBEY