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Viewing cable 09CAIRO1502, EGYPT'S ECONOMY: AUGUST 2 PRESS ROUND-UP

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Reference ID Created Released Classification Origin
09CAIRO1502 2009-08-04 10:10 2011-02-16 21:09 UNCLASSIFIED Embassy Cairo
VZCZCXYZ0003
RR RUEHWEB

DE RUEHEG #1502/01 2161028
ZNR UUUUU ZZH
R 041028Z AUG 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 3332
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS CAIRO 001502 
 
SIPDIS 
 
STATE FOR NEA/ELA 
 
E.O. 12958:  N/A 
TAGS: ECON EINV EFIN ETRD ENRG PGOV EG
SUBJECT: EGYPT'S ECONOMY: AUGUST 2 PRESS ROUND-UP 
 
ΒΆ1. (U) The following are notable economic news stories that appeared 
over the past week in the Egyptian press: ------------------------ Suez Canal revenue is 7.2% lower ------------------------

2.(U) Suez Canal receipts reached $4.7 billion during FY08/09, a reduction of 7.2% from the previous year. Colonel Ahmad Fadel, Chairman of the Suez Canal Agency, attributed the decline to the economic slowdown resulting from the global financial crisis. Fadel added that the Canal Agency decided not to lower the passage fees after a careful study of global maritime market. (All newspapers, 7/27/2009) ------------------------- IMF staff visit to Egypt -------------------------

3.(U) The IMF praised Egypt's ability to contain the repercussions of the global financial crisis. It also praised the Egyptian economic reform that started in 2004. A recent IMF staff visit report said the government is continuing to pump funds for investment, especially in infrastructure. In general, the IMF said the Egyptian economic performance for FY 08/09 was good and GDP growth is expected at 4.4%. The report also said inflation declined to below 10% down from its peak at 24% during August 2008 while foreign reserves are still capable of covering imports for more than 6 months. (Al Ahram and Al Akhbar, 7/29/2009) -------------------- Gas Export to Israel --------------------

4.(U) Egyptian press referenced reports from the Israeli Newspaper Ha'aretz and Globes magazine (on line) indicating that the Eastern Mediterranean Gas company (EMG) has signed a new deal to import 12 billion square meters of Egyptian natural gas to the Israeli company Dorad Energy Ltd. The duration of the contract is 17 years with the option of a five-year extension. The total cost of the deal amounts to about $2.1 to $2.7 billion. (El Masri El Yom and Yom 7, 7/29/2009) On the other hand, on July 26 the freedom committee of the Journalist Syndicate organized an objection stand against the gas exports at its headquarters. (El Masri El Yom, 7/27/2009) In a meeting with students in a summer camp in Alex, former Mofti Nasr Wassel said that the export of the natural gas to Israel is not correct according to the Islamic Shareaa. (El Masri El Yom, 7/30/2009) ------------------------------- Port Said topped world sea gateways in terms of growth in 2007 -------------------------------

5.(U) Egypt's East Port Said Port topped world sea gateways in terms of growth in 2007, Mohamed Mansour, Egypt's Minister of Transport, told members of the Arab Chamber of Commerce while showcasing investment opportunities in the country's transport sector. "The port's area will be increased to 56 square kilometers to make future expansion possible, which will create thousands of jobs for residents of Port Said and neighboring governorates," the official said according to a statement released by the Ministry of Transport. Development plans will be carried out in three phases totaling LE500 ($89.2 million). The first phase will be finished by 2015, according to Ibrahim Seddiq, the Chairman of Port Said Ports Authority. (Egyptian Gazette, 7/27/2009) ------------------------------- Banks may consider restricting credit in foreign currencies -------------------------------

6.(U) With the decline in both interest rates on foreign currencies and forex revenues from abroad, banks are considering restricting credit in foreign currencies, following a period of promoting this type of credit. Banking sources said the previous expansion in forex lending had exerted pressure on the foreign exchange interbank market after the drop in some banks' forex positions, prompting the CBE to inject more liquidity into the market, thus negatively affecting foreign reserves. The CBE had become more stringent about the banks' forex positions and liquidity ratios, which led banks to start reducing forex lending. (Al-Mal, 7/27/2009) ----------------------------- State-owned petroleum companies report their operations -----------------------------

7.(U) In financial reports submitted to the Chairman of the Egyptian General Petroleum Corporation (EGPC), state-owned petroleum engineering and construction companies Petrojet and Engineering for the Petroleum & Process Industries (ENPPI) posted total revenue for the last three years. Petrojet's total revenue for the period was LE 2.4 billion. ENPPI, currently conducting several projects in Egypt, seven other Middle East nations and Venezuela, stated total revenue of LE 1.2 billion during the same period. (Al Ahram, 7/30/2009) Scobey