Egypt is to receive a US$1 billion (Dh3.67bn) loan to finance energy and food imports after signing a deal with the Islamic Development Bank (IDB) yesterday.
The deal between the IDB's International Islamic Trade Finance Corporation and the government comes as attention focuses on how the new president, Mohammed Morsi, gets to grips with arresting Egypt's economic slide.
"It's a key area of concern for Egypt and rising costs of food and fuel are putting pressure on the import bill at a time when income from tourism, FDI [Foreign Direct Invesment] and other areas is down, creating external pressure on the currency," said Liz Martins, the senior economist at HSBC Middle East.
Food and fuel imports are two of the biggest drains on government finances.
Subsidies already eat up as much as 28 per cent of Egypt's 476bn-pound (Dh288.57bn) budget.
Almost two-thirds of spending on subsidies goes towards fuel and energy, with the rest helping to ease food prices.
Crude oil prices slid to their worst quarter since 2008, helping ease some of the pressure on the import bill, but prices of Brent crude traded up at $97 per barrel on Friday. The currency has recovered since Mr Morsi's election on Wednesday after falling to its lowest level in seven years against the US dollar.
The IDB deal will mean attention is likely to turn to whether the government will seal a deal with the IMF for a $3.2bn loan.
Negotiations have been dragging on since last year. But Mr Morsi is committed to pushing ahead with the talks, his spokesman, Yasser Ali, was quoted by Bloomberg as saying last week.
The IMF made broad Egyptian political support for the loan and the economic programme linked to cash one of the pre-conditions to releasing the funds.
Reforming subsidies was believed to be another term of the deal.
"A donor-funded programme remains critical from a macro perspective and will also be important in anchoring investor expectations," wrote Raza Agha, an economist at Royal Bank of Scotland, in a note last week.
"That said, progress on this front is still likely some time away as Morsi will need to appoint his cabinet first and develop a policy agenda to take to the IMF."
Mr Morsi's election campaign made much of his support for free-market policies, but investors are more concerned with how he sets about reforming the economy.
His challenge is to restore the economy to a sustainable growth path and avert a looming fiscal crisis.
Egypt's currency reserves have risen since March, but they are still less than half the level of February last year, when Hosni Mubarak was pushed from power.
Falling tourism revenue and foreign investment meant the current-account gap expanded to $6.4bn in the nine months to March.
tarnold@thenational.ae
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The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
FINAL RESULT
Sharjah Wanderers 20 Dubai Tigers 25 (After extra-time)
Wanderers
Tries: Gormley, Penalty
cons: Flaherty
Pens: Flaherty 2
Tigers
Tries: O’Donnell, Gibbons, Kelly
Cons: Caldwell 2
Pens: Caldwell, Cross
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Where to buy
Limited-edition art prints of The Sofa Series: Sultani can be acquired from Reem El Mutwalli at www.reemelmutwalli.com
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
Killing of Qassem Suleimani
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In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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Favourite place in UAE: Al Rams pearling village
What one book should everyone read: Any book written before electricity was invented. When a writer willingly worked under candlelight, you know he/she had a real passion for their craft
Your favourite type of pearl: All of them. No pearl looks the same and each carries its own unique characteristics, like humans
Best time to swim in the sea: When there is enough light to see beneath the surface
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Sarfira
Director: Sudha Kongara Prasad
Starring: Akshay Kumar, Radhika Madan, Paresh Rawal
Rating: 2/5
Mountain%20Boy
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- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
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FIGHT CARD
1. Featherweight 66kg
Ben Lucas (AUS) v Ibrahim Kendil (EGY)
2. Lightweight 70kg
Mohammed Kareem Aljnan (SYR) v Alphonse Besala (CMR)
3. Welterweight 77kg
Marcos Costa (BRA) v Abdelhakim Wahid (MAR)
4. Lightweight 70kg
Omar Ramadan (EGY) v Abdimitalipov Atabek (KGZ)
5. Featherweight 66kg
Ahmed Al Darmaki (UAE) v Kagimu Kigga (UGA)
6. Catchweight 85kg
Ibrahim El Sawi (EGY) v Iuri Fraga (BRA)
7. Featherweight 66kg
Yousef Al Husani (UAE) v Mohamed Allam (EGY)
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Jaures Dea (CMR) v Andre Pinheiro (BRA)
10. Catchweight 90kg
Tarek Suleiman (SYR) v Juscelino Ferreira (BRA)
Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
Specs
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The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
