Lower Corridor rate THE MONETARY Policy Committee (MPC) of the Central Bank of Egypt (CBE) raised the overnight lending and deposit rates, known as Corridor rate, by 0.5 per cent on 2 November to 10.5 per cent and 8.5 per cent respectively. The bank cited the reasons as being the "continued acceleration in economic growth, particularly in the construction and manufacturing sectors, and the effects of the July fuel price hike". The move was expected due to an unprecedented increase in the rate of inflation since 2004, to reach 9.6 per cent in the last week of October. Other factors that fed these expectations include the increase in interest rates on most foreign currencies. Commenting on the move, Egypt's leading investment bank EFG-Hermes said that although the hike on the lending side is minor, the impact of the general rise in interest rates on economic growth and commercial lending activity will depend on whether the tightening continues. It also depends on the reaction of banks to it. "The MPC indicated that its future decisions would depend on upcoming data releases," noted EFG, "a new tone that we believe signals a more developed and active monetary policy going forward." EFG added that the hike renders investment in Egyptian fixed income instruments more attractive, especially for USD-based investors in light of a stable Egyptian pound.The MPC fixed the corridor rate in five consecutive monthly meetings since April. Omar Effendi finalised AFTER years of failed privatisation attempts, Omar Effendi has finally gone private. The retailer's sale saga came to an end last week with the Saudi-based Anwal group signing a deal with the Holding Company for Trade, the retailer's parent company. According to the deal, Anwal will buy 90 per cent of Omar Effendi for LE589.5 million. The contract also obliges Anwal to preserve workers' rights and assume the cost of the early retirement of 1,200 employees to the tune of LE50 million. Anwal will also pump LE180 million for the renovation of several outlets and repay all the company's liabilities and due taxes of around LE155 million. The deal was expected to unravel in the 11th hour because Anwal wanted to study the conditions set by the government concerning the ownership of a 16,000-square metre warehouse owned by Omar Effendi in Nasr City. Sources close to the deal said the government wanted to exclude the warehouses from the deal, since their value if sold alone would reach LE250 million. This is almost 50 per cent of the amount Anwal is paying for the entire enterprise. The issue was resolved when Anwal affirmed that it would use the space as a warehouse for Omar Effendi goods and no other commercial purpose. The deal followed around 10 months of thorny negotiations between Anwal and the Egyptian government, amidst a public uproar, due to claims that the offered price was too low. US supports economy LAST WEEK Minister of International Cooperation Fayza Abul-Naga met Ambassador Randall Tobias, director of US foreign assistance and administrator of the US Agency for International Development (USAID), who visited Cairo 28-30 October. During the meetin Abul-Naga announced that the USAID programme will be restructured during the coming period, starting in 2008. Speaking at a news conference, the minister said the process includes expanding the transfer of technology and scientific knowledge by raising the number of scholarships provided to Egyptian students in American universities.In 1998, Cairo and Washington decided to decrease US economic assistance by five per cent annually -- about $40 million -- to reach $415 million by 2008. Aid for 2006/2007 stands at $495 million. Tobias asserted that the US government and people are proud of what is taking place in Egypt as a result of the USAID programme, especially that US assistance can be felt by the Egyptian people. "When USAID started to work with Egypt, electricity was not available for many Egyptians, but electricity is now available for 99 per cent of Egyptian people," he noted. During his three-day stay, the USAID official visited beneficiaries of the micro-finance projects in Khan Al-Khalili. This sector directly increases employment and earnings among low income groups. Since 1998, USAID finance initiatives in Egypt extended over 2.1 million micro-credit loans valued at LE5.1 billion. Business in Istanbul AS PART of efforts to promote Egyptian-Turkish trade, the tenth International Business Forum (IBF) due to be held next November will bring together entrepreneurs from both sides to develop partnerships, reports Eman Youssef. Minister of Trade and Industry Rachid Mohamed Rachid will lead the Egyptian delegation. The forum will include bilateral match-making meetings to promote cooperation in manufacturing and trade projects. The 11th MUSIAD International Trade Fair will be held parallel to IBF, attracting 40 Egyptian companies in various fields alongside 500 companies from 60 countries. More than 160,000 visitors are expected to visit the fair, which is supported by the Organisation of the Islamic Conference (OIC) and the Turkish Ministry for Foreign Trade. The fair will display a vast array of products such as machine tools, automotive, spare parts, electrical and electronic goods, textiles and garments, furniture, construction and building materials, foodstuffs and beverages, as well as packaging materials. IBF provides unique opportunities for the business community all over the world to pursue their individual trade and investment interests, according to Emre �ztelli, commercial counsellor at the Turkish Embassy in Cairo. According to �ztelli, the forum aims to promote greater support for Small and Medium Enterprises (SMEs) to enable them to play a pivotal role in accelerating growth, providing employment and mobilising local resources for global competitiveness. Turkey, with a booming export-oriented apparel industry, is slowly penetrating the markets of the Middle East, with Egypt as an obvious candidate to lead the pack. "Turkish companies regard the fair as the best event to market their products to the greater Middle East and to develop business opportunities in this region," noted �ztelli. Meanwhile, a Turkish business delegation recently visited Alexandria and met their counterparts to discuss trade cooperation. A new branch of SARAR, a renowned Turkish garments brand, was opened at Carrefour City Centre in Alexandria. The balance of trade between the two countries amounted to $1 billion in 2005, with Turkish exports to Egypt worth $700 million and Egyptian exports at $300 million. Turkish exports include cars, spare parts, plastic, wood and chemical products, while Egyptian exports to Turkey are rice, cotton, petroleum products and raw materials.
