Interbank rates down THE CENTRAL Bank of Egypt (CBE) reduced its overnight deposit rate by 25 basis points to 8.75 per cent. The decision, taken during the monthly meeting of the Monetary Policy Committee (MPC) last Thursday also reduced the overnight lending rate from 11 per cent to 10.75 per cent. "The decision," said the CBE, "was based on an assessment of recent economic developments, in particular the moderate reduction in inflationary pressures." It added it would not "hesitate to adjust key CBE rates in either direction... to ensure price stability over the medium term." Overnight lending and deposit rates mark the boundaries within which the overnight interbank rate fluctuates. The MPC, which comprises the CBE's governor, two deputy governors and six members of its board, meets on the first Thursday of every month. Third quarter growth GOVERNMENT figures reveal higher growth rates and expectations of improved economic performance, reports Mona El-Fiqi. Economic indicators announced this week reveal an unprecedented increase in the level of private sector investments, expanding oil and gas exports and growth in both the real estate and construction sectors. Overall growth during the first quarter of fiscal year 2005/2006 increased to 5.3 per cent from 4.8 per cent for the same period last year, said Osman Mohamed Osman, minister of planning, during a press conference held this week. He added that growth is expected to reach six per cent by the end of the current fiscal year. There was good news on inflation too, which fell to 3.1 per cent during the first quarter of the current fiscal year compared to 13.7 per cent during the same period last year. Osman attributed the improved growth mainly to a 13 per cent increase in oil and gas exports. But the positive indicators extended beyond the sector, with the construction industry registering growth of 13.5 per cent compared to 3.4 per during the same period last year. Meanwhile, a report issued by the Ministry of Planning revealed private sector investments had increased by 31 per cent to reach LE11.7 billion, or 58 per cent of total investments. The balance of payments also moved from a $1.1 billion deficit to a surplus of $1 billion. Exports increased by 30 per cent, imports by 35 per cent and remittances by 56 per cent. Improved economic performance, said Osman, has already resulted in the creation of 690,000 new jobs. Some sectors, though, were far more sluggish, particularly tourism which, in the wake of July's Sharm El-Sheikh bombings, grew at just two per cent. KFW support FAYZA Abul-Naga, minister of state for international cooperation, met Hans-Peter Neuhoff, vice- president of the German Bank for Development (KFW), to discuss German-Egyptian economic and technical cooperation. The German Bank for Development funds projects worth more than one billion euros in Egypt of which 874.41 million euros are in loans and 257.31 million euros in grants. Projects funded include the development of the Nagaa Hamadi barrage and the Zaafarana energy station. During the meeting Neuhoff praised government efforts to attract foreign direct investment as well as efforts to develop the water and sewage sector. Germany has provided Egypt with some 3.9 billion euros in development assistance. Food for thought THE GOVERNMENT is seeking to encourage industries other than textiles and ready-made garments to exploit the opportunities offered by the Qualified Industrial Zone (QIZ) protocol signed almost a year ago, reports Sherine El-Madany. Growers of vegetables -- mainly artichokes, beans and herbs -- and of fruits, for both table and juice, as well as producers of dairy products, are among those being targeted. "Currently there are 60 registered companies working in the food sector. Not one of them has benefited from the QIZ and no food products are currently being exported under the protocol," said Tareq Tawfiq, chairman of Food Commodities Council and deputy chairman of the Chamber of Food Industries. Yet, as Tawfiq points out, Egypt enjoys a competitive advantage in several fields and a good record of exporting to Europe which should help it break into the US market. Tawfiq was addressing a seminar organised by the American Chamber of Commerce on opportunities for non-apparel sectors in Egypt. "The QIZ is our quick entry to the global market and a tool for attracting foreign direct investment and migrating industries that have the know-how and the demand but are looking for cheaper labour," explained Tawfiq. More than 150 Egyptian products suitable for export to the US market have already been identified, he added. To ensure access to the US market Ali Awni, director of the QIZ Unit, a division of the Ministry of Foreign Trade and Industry, advised Egyptian producers to rehabilitate their farming and manufacturing procedures to meet US standards. The National Suppliers Development Programme, he pointed out, financed by the Industrial Modernisation Centre, offers local producers help in meeting American specifications and securing the necessary accreditation of farming processes and products.
