EGYPT’S BALANCE OF PAYMENTS RECORDS A · PDF fileportfolio investments and debt...
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Thursday 12 th Jan. 2017 Issue #1 THE WEEKLY www.alexbank.com Banking Sector Updates Economic Growth Rate Increases NIR Records Its Highest Level Since 2011 President Al-Sisi Meets Representatives Of Investment Funds First Bankruptcy Law Is Approved Eni Plans To Raise Its Investments In Egypt Egypt’s Annual Inflation Rate Hikes IN THIS ISSUE... A WORLD OF REAL POSSIBILITIES 1 RECORDS A SURPLUS EGYPT’S BALANCE OF PAYMENTS Egypt’s Balance of Payments ran an overall surplus of USD1.9 billion during Q1 FY 2016/17 (Jul-Sep 2016) versus an overall deficit of USD3.7 billion during the corresponding period a year earlier. This surplus is mainly attributed to the performance of the capital and financial account, which witnessed a surge in net inflows, reaching USD7.1 billion, compared to USD1.6 billion in the previous year. The increase in net inflows of capital and financial account came on the back of a 35.7% growth in Net Foreign Direct Investment inflows to USD1.9 billion due to the rise in net inflows for the oil sector and greenfield investments. On the other hand, the current account deficit (Trade and Services Balance & Transfers) increased by 24.3% to USD4.98 billion compared to USD4.01 billion. This increase stemmed from the 50.2% decline in the services surplus, driven by the fall in tourism revenues by 56.1% to USD758.2 million. Trade balance deficit dropped by 13.4% to USD8.7 billion compared to USD10 billion one year earlier. The improvement in the position of trade balance is due to an 11.2% increase in merchandise export proceeds to USD5.3 billion and a 5.5% decrease in merchandise import bill to USD13.9 billion
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Transcript of EGYPT’S BALANCE OF PAYMENTS RECORDS A · PDF fileportfolio investments and debt...
Thursday12th Jan. 2017
Issue #1THE WEEKLY
www.alexbank.com
Banking Sector Updates Economic Growth Rate Increases NIR Records Its Highest Level Since 2011President Al-Sisi Meets Representatives Of Investment Funds First Bankruptcy Law Is ApprovedEni Plans To Raise Its Investments In EgyptEgypt’s Annual Inflation Rate Hikes
IN THIS ISSUE...
A WORLD OF REAL POSSIBILITIES
1
RECORDS A SURPLUS
EGYPT’S BALANCE OF PAYMENTS
Egypt’s Balance of Payments ran an overall surplus of USD1.9 billion during Q1 FY 2016/17 (Jul-Sep 2016) versus an overall deficit of USD3.7 billion during the corresponding period a year earlier. This surplus is mainly attributed to the performance of the capital and financial account, which witnessed a surge in net inflows, reaching USD7.1 billion, compared to USD1.6 billion in the previous year.
The increase in net inflows of capital and financial account came on the back of a 35.7% growth in Net Foreign Direct Investment inflows to USD1.9 billion due to the rise in net inflows for the oil sector and greenfield investments.
On the other hand, the current account deficit (Trade and Services Balance & Transfers) increased by 24.3% to USD4.98 billion compared to USD4.01 billion. This increase stemmed from the 50.2% decline in the services surplus, driven by the fall in tourism revenues by 56.1% to USD758.2 million.
Trade balance deficit dropped by 13.4% to USD8.7 billion compared to USD10 billion one year earlier. The improvement in the position of trade balance is due to an 11.2% increase in merchandise export proceeds to USD5.3 billion and a 5.5% decrease in merchandise import bill to USD13.9 billion
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The corporate sector accounted for 58% of total credit facilities, while household deposits acquired 62.1% of total deposits at the end of September 2016.
The Central Bank of Egypt (CBE) released its monthly statistical bulletin that tracked the performance of the Egyptian banking sector at the end of September 2016, as shown in the following table:
“The relative breakdown of non-government credit balances by economic activity at the end of September 2016 shows that the manufacturing sector accounted for 32.4%, followed by services (27.2%), trade (10.8%), agriculture (1.4%), and unclassified sectors, including the household (28.2%)”
The Central Bank of EgyptMonthly Statistical Bulletin, November 2016The CBE Official Website
BANKING SECTOR UPDATES
Source: Central Bank of Egypt, Monthly Statistical Bulletin (November 2016)
Item (EGP billion)Securities & Investments in T-BillsLoans & Discount BalancesAssetsProvisionsDeposits
1,345.5
3,067.5
970.2
70.6
2,195.6
Sep-16 1,036
2,405.5
771.6
66.9
1,837.7
Sep-15 29.9%
27.5%
25.7%
5.5%
19.5%
Y/Y
Egypt’s Cabinet announced that the economic growth rate increased to 3.4% in Q1 FY2016/17 compared to 3% in Q1 FY2015/16. The higher growth rate is mainly attributed to the increase in the value of implemented investments due to the improvement in the business environment and the noticeable development in national mega-projects. The investment rate in Egypt rose to 12.1% in Q1 FY2016/17, from 11.3% a year earlier due to the increased investment in both public and private sectors.
Egypt’s Net International Reserves (NIR) recorded its highest level since 2011 after reaching USD24.3 billion in December 2016. NIR rose about 5.2% compared to the previous month, supported by the increasing foreign currency inflows from portfolio investments and debt instruments. CBE’s Governor, Tarek Amer, announced that portfolio investments amounted to USD1 billion one month after floating the Egyptian Pound. Amer also confirmed that banks operating in Egypt acquired about USD6.9 billion within the first two months after the floatation.
President Abdel-Fattah Al-Sisi met, on the 9th of January, with representatives from 27 regional and international investment funds in the presence of Prime Minister, the CBE’s Governor, Ministers of Oil, International Cooperation, Finance, Investment and Industry. During the meeting, President Al-Sisi discussed new investment opportunities in the Egyptian market and stressed the government’s efforts to overcome obstacles and provide an attractive climate for investment. Additionally, the ministers presented the government’s efforts to encourage investment and stimulate the economy on legislative, administrative and procedural levels.
“Egypt enjoys a large number of investment assets and promising opportunities in various sectors. It is also witnessing political stability despite troubled conditions in the region… We look forward to the investments that will contribute to Egypt’s economic development efforts, taking into account that Egypt has one of the highest rates of return on investment in the world”
President Abdel-Fattah Al-SisiAhram Online9th January 2017
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Egypt’s cabinet approved the country’s first Bankruptcy Law, which aims at improving the business climate in Egypt. The law abolishes imprisonment in cases of bankruptcy and simplifies post-bankruptcy procedures.
“The new bankruptcy law comes as part of the latest investment legislations adopted by the government to provide the maximum possible amount of guarantees for investors and businessmen”
Dalia KhorshedMinister of Investment Ahram Online5th January 2017
Claudio Descalzi, CEO of Italian energy company Eni, declared that Eni is planning to raise its energy exploration investments in Egypt to USD3.5 billion in 2017, adding that the massive Zohr gas field is expected to start production before the end of 2017. This announcement comes in light of his meeting with President Abdel-Fattah Al-Sisi, held on the 5th of January.
“Egypt currently tops the 53-country list of Eni’s investment portfolio”
Claudio DescalziEni’s CEOAhram Online5th January 2017
Petroleum Ministry is planning to implement 11 projects to develop gas fields in cooperation with foreign partners, with total investments worth USD17.5 billion and expected production of 1.9 billion feet of gas per day and 50,000 barrels of condensates.
Egypt’s annual urban inflation rate jumped to 23.3% in December 2016, from 19.4% in November, which is mainly attributed to the hike in food and beverages prices, whose prices rose 28.3% (Y/Y) in December, and the 32.2% increase in healthcare prices during the same period, in addition to a 23.2% (Y/Y) increase in transportation costs.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
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EGYPT AT GLANCEEXCHANGE RATES
TB’S AUCTION
EURO
USD
91 Days 18.889%
273 Days 19.858%
182 Days 20.060%
357 Days 20.109%
Sterling Pound
Auction Date Average Yield %Maturity
5th Jan. 2017
19.18
18.24
22.48
12th Jan. 2017
18.78
13,223.90 12,824.32 11,444.06 6,463.92 7089.06
22.90
1,154.37 1,113.04 1,065.12 757.8 796.29
19.89
473.1 464.27 448.82 372.34 383.71
12th Dec. 2016
18.13
22.80
19.11
12th Jan. 2016
11.35
7.81
8.48
STOCK MARKET
EGX 30
Previous**
+300 bp
+300 bp
+300 bp
4
* Average Buy & Sell Prices For CBE
8 Jan. 2017
12 Jan. 2017
8 Jan. 2017
12 Jan. 2017
2nd Jan. 2017
22.42
19.11
18.18
13,223.9
18.7819.89
22.90
EGX 70
EGX 100
Weight inbasket %
(Index)(January 2010=100)
November2015
November 2016 Y/Y
CONSUMER PRICE INDEX AND MAJOR COMPONENTS
Headline - All items
Food and beverages
Tobacco and related products
Clothing and footwear
Housing, water, electricity and gas
Furnishings and household equipment
Medical care
Transportation
Communications
Recreation and culture
Education
Hotels, cafes and restaurants
Miscellaneous goods and services
171.88 205.27 19.43%100%
203.81 247.63 21.50%39.92%
316.60 400.66 26.55%2.19%
130.94 156.93 19.85%5.41%
128.62 139.11 8.15%18.37%
145.02 177.75 22.57%
143.32 182.63 27.43%
3.77%
6.33%
140.79 171.70 21.96%5.68%
96.85 98.59 1.80%3.12%
179.37 209.28 16.67%
193.64 243.03 25.51%
2.43%
4.43%
219.01 246.00 12.32%
113.97 141.71 24.33%
4.63%
3.73%
INTEREST RATES
Overnight Lending Rate 12.75%15.75%
Overnight Deposit Rate 11.75%14.75%
Current*
* at November 2016 ** at June 2016
Corridor Rate 12.25%15.25%
GLOBAL COMMODITY PRICES
Brent Crude * 55.91 55.6956.89 30.86 37.28
Gold **
Wheat***
1,204.26
418
1,162.22
417.25
1,180.12
426.25
1,086.56
481.25
1,061.10
470.00
5th Jan. 201712th Jan. 2017 12th Jan. 201612th Dec. 2016 2nd Jan. 2017
Source: Bloomberg
Spot Prices
* USD/Barell ** USD/Ounce *** USD/BU
5th Jan. 201712th Jan. 2017 12th Dec. 2016 12th Jan. 2016 2nd Jan. 2017
Jan-16 Feb-16 Mar-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17Apr-16 May-16
6
8
10
12
14
16
18
20
22
24
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17
EGP per USD EGP per Euro EGP per Pound Sterling
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Researchers:
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Mirna Mohsen [email protected]
Research ManagerHemat El Masry
Head of ResearchEmil Eskander
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