Consumer confidence down CONSUMER confidence in the Egyptian economy was down in April, according to a report released this week by the Cabinet's Information and Decision Support Centre. The report says that the monthly consumer confidence index fell by 4.4 per cent last month, compared to March 2012. Also, the family income index fell in April by 21.1 per cent, while confidence in economic policies decreased, as well, by 0.8 per cent. However, an index for predictions of an improved economic status for the average family and society as a whole maintained the highest value in April compared to other indexes, despite a loss of 1.2 per cent in comparison to March. Those who predict an improvement in Egypt's economic status, the report stated, account for 54.9 per cent in April, down from 56.6 per cent in March of this year. Youth within the age group 18 to 30 years were the most optimistic during April, says the report. The lowest level of optimism was registered in the age group 30 to 50 years. University degree holders came in the first place in terms of optimism in April. Those with medium and upper medium education came next, followed by uneducated Egyptians. The report added that employed people are more optimistic than the unemployed, despite a decrease in their index of 5.9 per cent as opposed to March. The index of the unemployed fell by 2.5 per cent. Workers of the government sector are also more optimistic about the country's economic future than those who work in the private sector and the business sector. Djezzy fined $1.3 billion AN ALGERIAN court confirmed Tuesday a previous ruling penalising Orascom Telecom's (OT) Algerian subsidy Djezzy a sum of $1.3 billion in fines. The company said it would file an appeal against the verdict with the Algerian Supreme Court. The court suspended a two-year sentence against Djezzy's CEO. CI Capital commented on the news by saying the verdict was expected as a possible scenario following OT's decision to resort to international arbitration against the Algerian government's decision in March to impose a fine of $1.25 billion on Djezzy for breach of foreign exchange regulations. The dispute between the Algerian government and OT appears to be escalating after initially smooth negotiations brought Vimpelcom, the owner of OT, extremely close to sealing a deal to buy a 51 per cent stake in Djezzy. The dispute stems from differences on the deal's valuation. It is believed that this fine would be taken into consideration while negotiating the deal with the government. CBE lowers RRR again THE CENTRAL Bank of Egypt (CBE) decided, last week to lower its reserve requirement ratio (RRR) on local currency deposits by two percentage points from 12 per cent to 10 per cent, marking the second reduction in the ratio in 2012. The first was in March when the ratio was cut from 14 to 12 per cent. Beltone Financial said the move came as the effect of the first cut waned. "And with a persistent fiscal deficit and the dependence of the government, mainly on local banks, to finance its deficit, we believed that a move by the CBE to implement another RRR cut was imminent," said a Beltone note. Based on Beltone's calculations, the first RRR cut freed up an extra LE9.3 billion in liquidity in the banking sector. The latest move is expected to free up an extra LE9.4 billion in liquidity. Embracing the private sector THE GOVERNMENT should adopt policies that support the development of the private sector, especially small and medium sized enterprises, to enable it to create much-needed job opportunities. This message was at the heart of a roundtable organised this week by the Egyptian Centre for Economic Studies (ECES) on "Structural Reforms to Enhance the Business Environment in Egypt." "The private sector is the only hope for generating enough job opportunities, because the government can no longer offer that," according to Magda Kandil, executive director of ECES. "The Egyptian government can increase the available job opportunities in the market by embracing the private sector and attracting foreign investors," Kandil pointed out. That can be done, she added, through adopting structural reforms and strengthening business institutions. Investing in strong economic institutions would help to reach economic goals faster, she stated. Andrew Stone, the World Bank's private sector development specialist for the Middle East and North Africa region, believes that the job problem cannot be attributed solely to a slow pace of job creation. "Creating new jobs requires increasing growth rates, improving business environments, and attracting direct foreign investment," he said. Stone added that the services and manufacturing sectors could serve as engines of growth in both job creation and income. However, Stone underlined, business regulations, such as the time it takes to enforce contracts and to start a business, should be facilitated in order to have a better investment climate. "Along with good governance, suitable regulations can help employment growth," Stone said. Stone suggested some reforms that can help to accelerate private sector-led growth. Among these would be measures to facilitate business entry, facilitating business exit, enhancing access to information and the predictability of public rules, online payment of taxes and fees, and strengthening competition law. For Amina Ghanem, executive director of the Egyptian National Competitiveness Council (ENCC), economic institutions are very important to investment attraction because they establish and protect property rights, facilitate transactions and permit economic cooperation and organisation.
