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EGYPT [IntelliNews - Weekly Reports]
[January 25, 2013]

EGYPT [IntelliNews - Weekly Reports]

(IntelliNews - Weekly Reports Via Acquire Media NewsEdge) EGYPTEgypt to seek more lenient terms for new IMF loan Egypt will negotiate a new stand-by agreement with the IMF to borrow some USD 4.8bn, Al Mal newspaper reported citing Ashraf Al-Arabi, Minister of Planning and International Cooperation. The government plans to request from the IMF an extension of the agreement's implementation period further into FY 2014/2015, ending in June 2015, instead of the previously agreed 20-month period starting January 2013. It will also ask the IMF to reduce the minimum foreign exchange reserves limit of USD 19bn targeted for June 2013. To shore up the bulging budget deficit from a forecasted 10.4% of GDP in FY 2012/2013 to 8.5% in FY 2013/2014, Egypt's government will pledge to implement the earlier announced tax increases and energy subsidy cuts. It also plans to adopt a new gasoline distribution system rationing subsidised gasoline coupons for small cars in April. Finally, the government will also raise the selling price of diesel fuel to the tourism sector in May 2013.

Sport fans threaten to spread chaos ahead of Egypt revolution anniversary.

Ultras of the National Club, the most popular football team in Egypt, embittered by lack of a fair trial for the massacre of over 70 of their own at Port Said stadium last year, have escalated their protests disrupting vital state institutions and transportation lines. They besieged the stock exchange, attacked the underground metro system and cut off a major Cairo highway over the past couple of days, Al Watan newspaper reported. The well organized and trained National Club ultras, which are usually armed with firecrackers, vowed to take revenge from the security forces they blame for not protecting their murdered colleagues in Port Said. Their threats of violence and nationwide chaos is taking political overtones with the verdict for the Port Said trial scheduled to be delivered on Saturday, January 26, a day after scheduled celebrations of the second anniversary of the January 25th Revolution. The ultras threat of spreading nationwide chaos in case they feel justice is not served for their murdered fellows has fanned the fumes of mounting turmoil in an intensely polarised political environment with secularists, liberals and socialists pitted against Islamists, their former revolutionary comrades in arms, who came to dominate the government and the presidency.

Egypt's OCI to relist on EURONEXT New York with formidable equity stakeholders.

Orascom Construction Industries (OCI) board of directors unanimously approved to support the mandatory offer made by OCI N.V., partly owned by current holders of OCI's London registered GDRs, for 100% of OCI shares, the company said in a statement to the Egyptian Stock Exchange (EGX). OCI N.V. has commitments of up to US 2bn from a numbers of financial backers including Bill Gates' Cascade Investments, Southeastern Asset Management and Davis Select Advisor to execute its plan. OCI's GDR and ADR owners are being asked to swap their shares at a rate of 1:1 for OCI N.V. shares. Of the total sum under consideration, the offer's financial backers have earmarked USD 1bn to finance the purchase of OCI shares listed on EGX at EGP 280 per share (USD 42.1) from shareholders who do not select to swap their OCI shares to OCI N.V. shares. According to a bourse statement, the majority shareholders of OCI including the Sawiris family and Abraaj Capital, that hold a combined 60% equity stake, intend to retain or increase their current stakes. OCI N.V. plans to list its shares on EURONEXT New York on January 25, 2013 and subsequently plans to issue an ADR. The company said that the intention of listing the shares on EURONEXT is to cut financing costs by taking advantage of deeper US stock markets and better terms for debt financing on the Eurobond market rather than the Egyptian debt market.

Egypt's trade deficit shrinks 34.7% y/y in Oct 2012.

Egypt's trade deficit narrowed for the fourth consecutive month in October 2012 dropping by 34.7% y/y to EGP 13.68bn (USD 2.06bn) after shrinking by 22.1% y/y in September, the statistical agency CAPMAS said in a bulletin. The improvement was due to a 24.4% y/y decline in imports to EGP 27.65bn in October due to lower demand for some commodities, especially wheat, corn and chemical products. Meanwhile, exports also declined by 10.3% y/y to EGP 13.97bn in October mainly due to lower exports of petroleum products, textiles, furniture and pharmaceuticals.

Orascom Telecom to gain controlling stake in Canada's WIND.

Trading in Orascom Telecom (OT) shares was suspended on the Egyptian Stock Exchange (EGX) on January 20 on news that it agreed to acquire for an undisclosed sum the shares of AAL Corp in Globalive Wireless Management Corp, which operates under the WIND Mobile brand in Canada. The acquisition will raise OT's stake in WIND to 99%, thus gaining a voting control over the company, Orascom said in a statement. WIND founder Anthony Lacavera plans to step down as chief executive but will serve in a non-operational capacity as WIND's honorary chair after the deal closes later this year. EGX-listed OT is majority owned by VimpelCom Ltd., a Russian mobile operator.

Egyptian cotton export prices up in week 20 of 2012/2013 export season.

Egyptian cotton export prices for Giza 88 type jumped 8.8% y/y to USD 1.52 per lb in week 20 of 2012/2013 export season, AlMal newspaper informed citing a report by the Alexandria Cotton Exporters' Association. Meanwhile, prices for Giza 86 increased to USD 1.3 per lb in the same week. Exporters signed deals for 1978mn tons in week 20 bringing total exports to date to 33,110 mn tons worth USD 95.12mn since the beginning of the season which started in September 2012.

Central Bank of Egypt relaxes trade finance rules for banks.

Egypt's central bank CBE decided to temporarily allow banks to provide trade finance credits in foreign currency to importers, the bank said in a statement. Up to now banks were allowed to provide trade credits in foreign currency only to clients that had a demonstrable revenue stream in foreign currency. Under the new rules, banks will conduct proper credit study of the borrower's ability to make good on foreign currency denominated liabilities before extending the financing.

Foreign currency loans/deposit ratio was 24% at the end of October 2012. According to figures published by CBE, total loans in foreign currency were EGP 59.7bn (USD 9bn) against total deposits of EGP 248.3bn (USD 37.4bn). The latest CBE move comes amidst a severe shortage of foreign currency on the market accelerating the depreciation of the Egyptian Pound in the past month.

Egypt sells treasury bills worth USD 904mn.

Egypt's finance ministry placed with local banks treasury bills worth EGP 6bn (USD 904mn) in two auctions. It sold EGP 2.5bn in 182-day T-bills at an average yield of 13.6% and EGP 3.5bn in EGP 3.5bn bills priced at an average yield of 14%.

Centamin to invest USD 250mn in Sukkari gold mine in 2013.

Centamin plans to invest an additional USD 250mn in the Sukkari gold mine in Egypt in the first half of 2013, Al Mal newspaper reported citing company CEO Sami El Raghi. The investment will go towards further developing operations at the mine which produced 85,543 ounces of gold in Q4 2012, up by 45% y/y. The mine's total production for 2012 was 262,958 ounces. The new investment is expected to bring the total output up to between 300,000 to 400,000 ounces in 2013, and to 500,000 in 2014. Centamin has a 50:50 profit sharing agreement with the Egyptian authorities after royalty payments and deduction of recoverable expenses. Centamin expects to recover its cost of investment at the Sukkari mine by H2 2013 giving Egypt's balance of payment and foreign currency reserves much needed support.

Egyptian-Saudi venture to build USD 3bn bridge linking the two countries.

Saudi Arabia's largest construction company Binladin Group has agreed to build a USD 3bn bridge linking Egypt with Saudi Arabia at the initiative of Egypt's president Mohamed Morsi, Ahram Online reported citing MENA news agency. The project is to be implemented in collaboration with Egypt's state-owned construction giant Arab Contractors. The project is contingent on the approval of the relevant authorities of both countries. The bridge will improve the passenger and freight transportation between Egypt and Saudi Arabia thereby promoting commercial cooperation between the two key Arab countries.

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