Egypt’s inflation lowest in nearly a decade

Updated 09 November 2019

Egypt’s inflation lowest in nearly a decade

  • Poor and middle-class Egyptians have been bearing the brunt of harsh austerity measures since 2016 when the government secured a $12-billion bailout from the IMF in exchange for implementing economic reforms
  • Inflation had skyrocketed to 33 percent in 2017 following subsidy cuts and the devaluation of the Egyptian pound

CAIRO: Egypt’s inflation rate dropped to the lowest level in nearly a decade last month, official figures showed Saturday, as cheaper food offered respite to consumers squeezed by IMF-backed reforms.
The annual inflation rate was 2.4 percent in October, compared with 17.5 percent a year earlier, the Central Agency for Public Mobilization and Statistics (CAPMAS) said.
The state body said the decrease was due to a drop in the cost of household items such as food and drink.
“The increase in agricultural production led to a drop in prices of fruit and vegetables, which in turn affected food prices that make up about 40 percent of consumer costs,” Cairo-based economist Iman Negm told AFP.
“The Egyptian pound’s recovery against the US dollar has also contributed to the inflation rate slowing down,” she added.
Negm expects the central bank to cut interest rates because of the weaker price pressures.
Inflation had skyrocketed to 33 percent in 2017 following subsidy cuts and the devaluation of the Egyptian pound.
Poor and middle-class Egyptians have been bearing the brunt of harsh austerity measures since 2016 when the government secured a $12-billion bailout from the International Monetary Fund in exchange for implementing economic reforms.
Nearly one in three Egyptians live below the poverty line, according to official figures released in July.
CAPMAS said that other costs, such as transportation and health care, had risen.
President Abdel Fattah El-Sisi regularly calls on Egyptians to endure the economic hardships for the promise of future prosperity.
Egypt’s economy took a battering in the immediate aftermath of the revolution that toppled longtime autocrat Hosni Mubarak in 2011.
Direct foreign investment has grown to record levels in recent years, but the national debt has ballooned since the pound was floated in November 2016, leading to a sharp depreciation.


Sharjah sells $1bn sukuk

Updated 03 June 2020

Sharjah sells $1bn sukuk

  • Gulf states seek to bolster finances hit by pandemic and historic slide in oil prices

DUBAI: Sharjah, the third-largest emirate of the UAE, sold $1 billion in seven-year sukuk, or Islamic bonds, on Tuesday, according to a document from one of the banks arranging the deal.

The debt sale comes as several governments in the Gulf seek to bolster their finances to face the economic fallout from the coronavirus pandemic and a historic slide in oil prices.

Sharjah set the final spread at 245 basis points (bps) over midswaps for the sukuk, which are Islamic sharia-compliant bonds, according to the document seen by Reuters.

It tightened the spread by 30 bps from where it began marketing the notes earlier on Tuesday.

Sharjah, rated Baa2 by Moody’s ratings agency and BBB by S&P, is a relatively frequent issuer of US dollar Islamic bonds.

HSBC was hired as global coordinator for the transaction. Other banks on the deal were Bank ABC, Dubai Islamic Bank, Gulf International Bank, Mashreqbank and Sharjah Islamic Bank.

In May, the emirate raised 2 billion dirhams ($545 million) in privately placed one-year sukuk to support its economy during the coronavirus pandemic, according to a statement by Bank of Sharjah, which arranged that deal.

“Issued as 12 month dirham-denominated paper in several tranches, the Sharjah Liquidity Support Mechanism (SLSM) sukuk represents the first rated short term local currency tradeable instrument in the UAE, which can be used for liquidity management by banks,” the Sharjah Finance Department said in a statement on Tuesday, confirming that deal. It said that it was a first tranche and that further tranches with one or more other banks were expected to expand the SLSM to 4 billion dirhams.

S&P Global Ratings in April revised its outlook on the emirate to negative from stable due to lower oil prices and the impact of the new coronavirus.

“Although we expect GDP growth to recover in 2021, lower-for-longer oil prices and a protracted lockdown period could pressure the emirate’s fiscal position,” the agency said.