Economy

Egypt’s Economy Gathering Strength—IMF

Published

7 years ago

26/09/2017

By Modupe Gbadeyanka

The International Monetary Fund (IMF) has disclosed that the Egyptian economy “is gathering strength” after the country’s authorities embarked on an ambitious reform program and also taking “decisive measures aimed at restoring macroeconomic stability and sustainable public finances.”

In a statement issued on Tuesday, September 26, 2017, the IMF said the North African nation has so far been able to have a flexible exchange rate regime as well as reduced its budget deficit.

In addition, the global financial firm said Egyptian authorities have been able to also come up with energy subsidy reform, include women and youth to share the benefits of growth more broadly, and have higher growth through wide-ranging structural reforms.

Head of the team dealing with Egypt at the IMF, Subir Lall, noted that, “By strengthening social protection measures, they have sought to protect the most vulnerable.

“We have seen that economic activity has been gathering strength and efforts at reining in the budget deficit have begun to bear fruit. With the liberalization of the foreign exchange market, foreign currency shortages have disappeared.

“Looking ahead through the end of this year and into next year, the policy mix is also supportive of a decline in inflation from the high levels in the summer.”

Egypt launched a reform program when its economy faced rising imbalances that led to high public debt, a widening current account deficit, and declining official reserves.

To support the home-grown reforms, the government embarked in November 2016 on an IMF-supported program to restore the stability of its finances, promoted growth and employment, while shielding the poor from the adverse effects of the changes.

With the floating of the Egyptian pound, the foreign exchange market normalized, and the parallel market for foreign currency disappeared. The focus of monetary policy is to bring down inflation, which reached more than 30 percent since April, mainly due to the sharp depreciation of the pound and the impact of energy and tax reforms.

Also, Egypt adopted a value-added tax (VAT) as part of its reform program which aims to increase tax revenues sustainably. The government also took steps to reform expenditures, including notably energy subsidies. Resources from the higher VAT and more efficient spending will slow the accumulation of public debt, which had been rising rapidly.

In addition, government has taken bold steps to reduce energy subsidies which benefit mostly the rich, and also skew production to energy-intensive industries. The government reallocated part of the resources to social spending, including on health and education, and for targeted cash transfers.

Furthermore, government took measures to increase employment and labour force participation for women and youth. It has allocated budget resources to increase access to and the quality of public nurseries to help women join the labour force. It is also planning to improve the safety of public transportation. The government has also implemented specialized training programs and job search schemes for youth.

Recently, the parliament approved several measures to improve the business climate such as less red tape in industrial licensing, and easier access to financing for small and medium-sized enterprises. These measures should create more new jobs and help alleviate unemployment, which is particularly concentrated among women and young people.

According to the IMF, building on the ongoing reform efforts and the restoration of confidence, Egypt has the opportunity to transition to a higher growth trajectory, and increase prosperity for all, by locking in the gains from macroeconomic stabilization and harnessing its full growth potential.

Economy

NASD OTC Bourse Declines Further by 0.16%

Published

7 hours ago

22/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.16 per cent decline on Tuesday, January 21, extending its loss this week to two.

This further depleted the market capitalisation of the alternative stock exchange by N1.65 billion at the close of transactions to N1.071 trillion from the N1.073 trillion it closed in the preceding session.

In the same vein, the NASD Unlisted Security Index (NSI) slid by 4.79 points to wrap the session at 3,100.33 points compared with 3,105.12 points recorded in the previous session.

The bourse ended with two price losers yesterday led by Geo Fluids Plc, which gave up 32 Kobo to trade at N4.38 per share versus Monday’s closing price of N4.70 per share and FrieslandCampina Wamco Nigeria Plc, which depreciated by 15 Kobo to close at N39.50 per unit compared with the previous day’s N39.65 per unit.

On the second trading day of the week, the number of deal carried out slightly went up by 8.3 per cent to 13 deals from the 12 deals executed at the previous trading session.

Also, the value of transactions increased by 97.2 per cent to N4.5 million from the N2.5 million recorded a day earlier, while the volume of securities traded in the session declined by 71.6 per cent to 183,780 units from the 767,610 units recorded on Monday.

FrieslandCampina Wamco Nigeria Plc remained the most traded equity by value (year-to-date) with 4.1 million units worth N162.9 million, followed by Geo-Fluids Plc with 9.1 million units valued at N44.0 million, and 11 Plc with 55,358 sold for N14.5 million.

Also, Industrial and General Insurance (IGI) Plc closed the day as the most active stock by volume (year-to-date) with 25.3 million units worth N5.9 million, trailed by Geo-Fluids Plc with 9.1 million units sold for N44.0 million, and FrieslandCampina Wamco Nigeria Plc with 4.1 million units valued at N162.9 million.

Economy

Naira Crashes to N1,552/$1 at NAFEM, N1,670/$1 at Black Market

Published

8 hours ago

22/01/2025

Adedapo Adesanya

By Adedapo Adesanya

Pressure further mounted on the Nigerian Naira in the different segments of the foreign exchange market on Tuesday, making its value to shrink against the United States Dollar at the close of business.

In the Nigerian Autonomous Foreign Exchange Market (NAFEM), the domestic currency crashed against its American counterpart during the session by 0.18 per cent or N2.73 to settle at N1,552.78/$1, in contrast to Monday’s closing price of N1,550.05/1.

But against the Pound Sterling and the Euro, the local currency traded flat in the official market yesterday at N1,906.98/£1 and N1,613.48/€1, respectively.

As for the black market segment, the Naira weakened against the Dollar on Tuesday by N5 to sell for N1,670/$1 compared with the preceding day’s value of N1,665/$1.

Meanwhile, the cryptocurrency market heaved a sigh of relief during the session as President Donald Trump created a crypto task force dedicated to “developing a comprehensive and clear regulatory framework for crypto assets.”

The task force will be led by Commissioner Hester Peirce, a long-time advocate for the crypto industry, and will work closely with the crypto industry to develop regulations. This is after Mr Gary Gensler, an opponent of crypto, officially stepped down as chairman of the US Securities and Exchange Commission (SEC) after Mr Trump’s term started.

The task force will also work with Congress, providing “technical assistance” as it crafts crypto regulations.

Solana (SOL) recorded a 9.2 per cent growth to sell at $257.09, Dogecoin (DOGE) rose by 7.6 per cent to $0.36789, Ripple (XRP) added 4.0 per cent to finish at $3.18, and Bitcoin (BTC) increased by 3.7 per cent to $105,515.03.

Further, Binance Coin (BNB) appreciated by 2.8 per cent to close at $699.01, Cardano jumped by 2.1 per cent to trade at $0.9972, Ethereum (ETH) soared by 2.0 per cent to settle at $3,308.21, and Litecoin (LTC) went up by 1.5 per cent to end at $116.72, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.

Economy

Brent Falls Below $80 as US Signals Boost to Oil Output

Published

9 hours ago

22/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The price of the Brent crude oil grade went below the $80 mark on Tuesday after it shed 86 cents or 1.1 per cent to trade at $79.29 per barrel after the US President, Mr Donald Trump, signaled the possibility of his country boosting its oil production.

This move raised concerns of higher US output in a market widely expected to be oversupplied this year, with the US West Texas Intermediate (WTI) crude futures falling by $1.99 or 2.6 per cent during the session to $75.89 per barrel.

On his first day in office, the US President signed an executive order to unleash America’s energy by easing the barriers to oil and gas extraction and production and revoking a series of climate orders by former President Joe Biden.

As pledged in the campaign, the executive order follows the declaration of a national energy emergency.

The declaration includes measures to expedite energy infrastructure delivery, and emergency approvals by agencies “to facilitate the identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources, including, but not limited to, on Federal lands.”

This will likely confirm expectations that the oil market will be oversupplied this year after weak economic activity and energy transition efforts weighed heavily on demand in top-consuming nations the US and China.

President Trump also said he was considering imposing 25 per cent tariffs on imports from Canada and Mexico from February 1, rather than on his first day in office as promised.

The delay helped ease concerns of an immediate tightening of the market among US refiners, many of which are geared to process the type of crude oil supplied by these countries.

The US Energy Information Administration (EIA) reiterated on Tuesday its expectations for oil prices to decline both this year and next.

On its part, the Organisation of the Petroleum Exporting Countries (OPEC) projects robust demand growth in the world both this year and next.

In 2025, OPEC says demand is set to grow by 1.4 million barrels per day leaving its projection unchanged from the December report.

However, losses were also limited after the US president said his administration would “probably” stop buying oil from Venezuela. The U.S. is the second-biggest buyer of Venezuelan oil after China.

Also weighing on prices on Tuesday was the potential end to the shipping disruption in the Red Sea.

Yemen’s Houthis said on Monday they will limit their attacks on commercial vessels to Israel-linked ships provided the Gaza ceasefire is fully implemented.