Sunday economy roundup

In this week's economy roundup: Plans to reduce energy subsidies, a new post-uprising high for the EGX30, and inflation hitting 11.5 percent

Finance Minister says subsidies to decrease

In the effort to curtail government spending, Ahmed Galal, the minister of finance, revealed plans to decrease the annual US$20 billion spending on energy subsidies. He made clear these plans would leave $4.4 billion allocated to food supplies untouched. During his interview with the London-based Pan-Arab daily Asharq Al-Awsat, he said the government would implement the smart card system to ward off energy smuggling.

Galal added that plans to decrease energy subsidies would be carried out over the next two years to avoid price shocks to consumers, while implementation plans would be coupled with societal dialogue.

EGX30 breaks the 6,000 mark

The Egyptian Stock Exchange reached a record high since January 26, 2011, closing at 6,415.8 points on Thursday. Since the start of Morsi’s presidency in June 2012, the main index, the EGX30, did not break 6,000, reaching a high of 5,964 on September 25, 2012. The index since fluctuated between this peak and a low of 4,524 on June 23, 2013.

The Deputy Chief of the Securities Division, Eissa Fathy, told Egynews on Wednesday that the market’s reaction says that fears related to Morsi’s trial have dissipated followed the absence of violence on the day of the first hearing.

The EGX30 fell Sunday after most stocks gained, influenced by foreign sales, falling by 0.93 percent. The index yield to date stands at 16.36 percent.

Inflation on the rise

Egypt’s main statistics agency, CAPMAS, said that annual inflation reached its highest level in 2013. Prices increased last month by 11.5 percent when compared to the same month last year. Abou Bakr el-Guindy, CAPMAS president, attributed the increased inflation from the rise in meat prices during the Eid holidays, recurring gas cylinder shortages and the start of the new school year.

Food inflation was particularly high, with food staples, bread and grain rising 17.8 percent, vegetables rising 19.4 percent, and chicken rising 25.5 percent. Medical health services witnessed a rise of 10.2 percent.

Economic snippets

• The minister of commerce and industry, Mounir Fakhry, affirmed in a release last Saturday that despite the tough economic conditions Egypt has gone through over the past two years, exports have held their ground. The ministry expects total exports to amount to LE150 billion in 2014, compared to LE130 billion in 2013.
• Sherif Ismail, the minster of petroleum, signed five new petrol and gas exploration agreements with Transglobe Energy and Vegas Oil & Gas worth at least US$115 million. Another nine agreements were signed last week, for the first time since 2010, totalling 14 agreements with a worth of US$585 million. The 14 agreements come in the framework of a total of 21 new agreements.
• The fall out with the governments of Qatar lead the Egyptian government to give back US$500 million of a Qatari deposit on November 1 and will return another $500 million at the beginning of December, a source at the Central Bank told Reuters.