Egypt’s economy exceeds expectation despite pandemic

Students are being transported by their family members on motorcycles during the first day of school, following months of closure due to the coronavirus disease (COVID-19) outbreak in the Giza suburb of Awsim, Egypt October 18, 2020. (Reuters)
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Updated 19 October 2020

Egypt’s economy exceeds expectation despite pandemic

  • The IMF also expects a decline in the overall deficit of GDP to 5.2 percent during 2022-23

CAIRO: Egyptian Finance Minister Mohamed Maait said on Sunday that the financial performance of the Egyptian economy during the coronavirus disease (COVID-19) pandemic exceeded expectations, according to the International Monetary Fund’s (IMF) testimony in its Global Economic Outlook report for October 2020.

In an official statement, he said the economic reforms adopted by President Abdel Fattah El-Sisi had strengthened the Egyptian economy and made it resilient in the face of internal and external challenges.

He said much of that was due to the flexible handling of the pandemic, as the state adopted a proactive policy of allocating 2 percent of its gross domestic product (GDP) to support the most vulnerable economic sectors and groups. Steps were taken in a way that contributed to mitigating the shock and supported the national economy, he said.

The minister said the IMF expected the Egyptian economy to rapidly recover in the medium term and for the country to achieve growth rates higher than those prior to the pandemic.

The IMF also expects a decline in the overall deficit of GDP to 5.2 percent during 2022-23 and 3.8 percent by the 2024-25 fiscal year, reflecting the ability of Egyptian financial policies to deal positively and effectively with local and international variables.

“According to the estimates of the IMF, the state budget, despite the pandemic, will achieve a primary surplus of 0.4 percent of GDP during the current fiscal year, which will rise to 2.1 percent during 2022-23, and the trend will continue at a sustainable rate up to 2 percent on average until 2025,” Maait said.

The finance minister said the IMF expected Egypt to increase total state revenues during the current fiscal by 20 percent, compared to 19.2 percent in the previous year, continuing until the fiscal year 2024-25.

Public expenditures are also expected to decrease to 25.4 percent in the current fiscal year, compared to 28.4 percent last year.

Despite the IMF report indicating a state of ambiguity about the outlook for the global economy, the Egyptian economy’s outlook remained optimistic, Maait said, as the IMF has raised its estimate of the growth rate to 3.5 percent instead of 2 percent during the last fiscal year.

He pointed out that the state’s general budget recorded a slight initial surplus of 100 million Egyptian pounds ($6.39 million) during the first quarter of the current fiscal year, despite the repercussions of the pandemic, meeting the needs of the health sector, all budgetary bodies, greatly increasing government investments and paying pension fund dues.

He said the annual growth rate of revenues rose to 18.4 percent during July and September 2020, despite the continuing negative effects of the pandemic on economic activity, while the annual growth rate of expenditures reached 11 percent due to the increase in government investment allocations, the provision of support allocations and social protection programs, and increased spending on health and education.

Sweden bans Huawei, ZTE from upcoming 5G networks

Updated 20 October 2020

Sweden bans Huawei, ZTE from upcoming 5G networks

  • European governments have been reviewing the role of Chinese companies in building their networks
  • Sweden’s security service called China ‘one of the biggest threats against Sweden’

STOCKHOLM: Swedish regulators on Tuesday banned the use of telecom equipment from China’s Huawei and ZTE in its 5G network ahead of the spectrum auction scheduled for next month.
The Swedish Post and Telecom Authority (PTS) said auctions the setting of the license conditions followed assessments by the Swedish Armed Forces and security service.
European governments have been reviewing the role of Chinese companies in building their networks following pressure from the United States, which says they pose a security threat because, among other concerns, Chinese companies and citizens must by law aid the state in intelligence gathering.
Sweden’s security service called China “one of the biggest threats against Sweden.”
The United Kingdom in July ordered Huawei equipment to be purged completely from Britain’s 5G network by 2027, becoming one of the first European countries to do so.
Huawei and ZTE did not immediately respond to requests for comment on the decision by Sweden, home to Ericsson, one of Europe’s leading telecoms equipment suppliers.
“The ban leaves network operators with less options and risks slowing the rollout of 5G in markets where competition is reduced,” said Ben Wood, chief of research at CCS Insight.
The ban is likely to benefit rival telecom equipment makers Ericsson and Finland’s Nokia.
PTS said companies taking part in the auction must remove Huawei and ZTE gear from existing central functions by Jan. 1, 2025.
The regulator defined central functions as equipment used to build the radio access network, the transmission network, the core network and the service and maintenance of the network.
PTS said the license conditions were decided to address the assessments made by the armed forces and security service.
It has approved the participation of Hi3G Access, Net4Mobility, Telia Sverige and Teracom in the planned spectrum auction of 3.5 GHz and 2.3 GHz, key bands crucial for the rollout of 5G.
Tele2 and Telenor will participate together as Net4Mobility to secure spectrum for a joint nationwide 5G network.
Tele2, which uses Huawei equipment in its network, which had earlier called Huawei an important vendor, said the PTS decision “does not change our plans substantially.”
“We may have to phase different costs differently between years to meet security conditions on time,” a spokesman told Reuters.
The 5G spectrum auction was originally planned for early 2020, but last year PTS said it would delay the auction due to a security review. PTS announced in April this year that the auction would begin in November.