Cheaper IMF loan THE INTERNATIONAL Monetary Fund (IMF) will lower the interest rate on its $3.2 billion loan to Egypt from 1.5 per cent to 1.1 per cent, according to Zawya news service quoting Hany Qadry, deputy finance minister. The move stemmed from a worldwide decline in interest rates. The second round of negotiations on the terms of the loan is expected to take place within a few weeks during a visit of an IMF delegation to Cairo. The government of Egypt began negotiations two weeks ago with the IMF in Cairo to acquire a loan of $3.2 billion to support the state budget's deficit of LE134 billion and the balance of payment. These negotiations are expected to be finalised over the next three months. The government had previously agreed with the IMF to acquire the loan but turned it down in June only to ask for it again in November. The loan will be repaid over five years with a 39-month grace period. "Amidst the rising cost of domestic borrowing and widening fiscal deficit, we believe that this low-interest payment loan coupled with the accompanied grace period could prove crucial in alleviating rising fiscal pressures. At the same time, receiving an IMF loan during the current instability may renew some investor confidence in the Egyptian market," commented CI Capital, the local investment bank, on Qadry's statement. Egypt applies for $1 billion loans EGYPT plans to apply for $1 billion in loans from both the World Bank and the African Development Bank, Minister of Planning and International Cooperation Fayza Abul-Naga told reporters earlier this week. Abul-Naga said each loan is for $500 million and will be allocated for the state budget deficit. She added a World Bank mission has been invited to visit Egypt to discuss the loan which will carry interest rates ranging between 0.7 and 0.8 per cent. More privatisations to come THE PRIVATISATION programme is not frozen as more companies will be put on the bloc soon but under strict professional guidelines, Fayza Abul-Naga, minister of planning and international cooperation told the daily Al Ahram. Abu El-Naga said the prime minister asked the government to examine the status of 100 public sector companies that are facing financial and operational difficulties to examine their candidacy for privatisation. However, distressed public companies, which only need restructuring and injecting funds to return to profitability, would stay under the state umbrella. In 2011, Egyptian courts ruled to return four privatised companies to state ownership, prompting government appeals against the decisions. While the companies' owners have turned to international arbitration to contest the court rulings, Abul-Naga noted that the government prefers out-of-court settlements with company owners. Free cement factory licences THE INDUSTRIAL Development Authority (IDA) finalised needed studies to offer 12 new cement licences. As the authority will not be obliged to provide the new cement factories with energy, it is offering the licences for free. Bidders for the new licences must obtain approvals from the Petroleum Ministry, revealing whether the energy delivered to these factories will be bought from the ministry or imported. Commenting on the news, CI Capital said the move would increase competition in the cement market and curb price growth, negatively affecting cement companies but in favour of both the end consumers and real estate developers. However, this is expected post the full production of these cement factories, which is not expected to start full operations before two to three years' time as the average time of constructing a cement factory is 1.5 to two years. Ghabour asks for lower tuk-tuk taxes GBABOUR Auto (GB Auto) sent letters to the prime minister, the minister of industry and trade and the minister of finance, not to raise the sales taxes on tuk-tuks from 10 to 15 per cent and customs tariffs from 10 to 40 per cent. The company argues that tuk-tuks should not be classified as passenger cars but as motorbikes with three wheels as per the Traffic Law 121/2008. Tuk-tuks, according to the company's letter, represent the only method of transportation for around three million people in rural areas, employ more than 180,000 people per annum and generate more than LE250 million in tax and tariff revenues for the government. Market experts believe the decision to raise the taxes and tariffs on tuk-tuks will increase its price by 36 per cent and will negatively impact the demand on the three wheeler which will affect GB Auto sales in 2012, 13 per cent of which is expected from tuk-tuks. Ezz Steel profits down 26 per cent EZZ Steel, the largest independent producer of steel in the Middle East and North Africa (MENA) region and market leader in Egypt with a market share of 48 per cent in 2011, reported net profits of LE179 million for the nine months ending September 2011, 26 per cent less than its profits in the corresponding period of the previous year. A company statement stated that consolidated net sales for the first nine months of 2011 were LE14.2 billion, representing an increase of 22 per cent on the same period in 2010, thanks to higher prices. The long steel product prices rose by 27 per cent year-on-year over both local and export markets, while flat steel prices rose by 17 per cent domestically, and by 22 per cent for export markets. 2011 was a difficult year for the company whose chairman and founder, Ahmed Ezz, is imprisoned on charges of profiteering. Although current operational capacities remain intact, a licence granted to the company in 2008 was withdrawn in 2011, albeit with an agreement reached with the government in early 2012 to pay for the licences and retain them. In addition, the company is facing another legal issue related to the acquisition of Ezz Al-Dekheila. Upgrading banks' IT platforms INTERNATIONAL Data Corporation (IDC) has issued its list of top 10 predictions for the financial sector in the Middle East and Africa (MEA) region in 2012. According to the predictions, financial institutions are expected to adopt latest technologies and communication trends in 2012 to improve customer experience, brace for competition with global players on the region's markets and to comply with increasingly strict regulatory requirements.Moreover, IDC predicts that the financial institutions are expected to consider upgrading their existing IT platforms to achieve systems integration, leverage business intelligence tools to extract maximum value from high volumes of data, utilise social media to engage existing or prospective customers and adopt stronger end-user security practices. Also among the predictions is that Islamic finance will continue its healthy growth in 2012 and that technology development must cater to it."IT budgets are forecast to continue growing in 2012. However, the uncertain economic, political, and regulatory environments will affect spending initiatives among financial institutions across the region," says IDC's Senior Research Analyst, Bijen Ramdas, who added that "the utilisation of social media, development of remote-access services, implementation or expansion of loyalty programmes, and improvement of customer security will thus all be critical in retaining customers and attracting new ones." Ramdas also said that IDC predicts the provision of transactional services on a mobile banking platform will expand to offer a wider range of more sophisticated services.According to IDC, economic growth levels in MEA region in 2011 was similar to that of the previous year, with an average gross domestic product (GDP) of 4.6 per cent. NATC in Cairo THE NORTH Africa Technical Conference and Exhibition (NATC) will be held in Cairo from 20 to 22 February under the patronage of the Egyptian Ministry of Petroleum. The conference which is organised by the Society of Petroleum Engineers (SPE) aims at addressing various issues in the oil and gas industry in the region including exploration, facilities, petroleum economics, drilling challenges and human resources management. NATC is expected to host a technical programme with over 170 presentations and will feature over 30 exhibitors. The event will be attended by Abdallah Ghorab, the minister of petroleum, who will inaugurate the exhibition and address industry leaders.
