Egypt’s September inflation of 3.7% could trigger IMF consultation

Inflation soared to a peak of 33.0 percent in July 2017 after Egypt implemented IMF austerity measures. (AFP file photo)
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Updated 10 October 2020

Egypt’s September inflation of 3.7% could trigger IMF consultation

  • Egypt earlier committed to consult an IMF technical team if year-on-year inflation fell below 6 percent by the end of September

CAIRO: Egypt’s headline inflation came in at under 4 percent in September, potentially triggering consultations with the International Monetary Fund (IMF) that could lead to lower interest rates.
Under a one-year, $5.2 billion loan agreement signed in June, Egypt committed to consult an IMF technical team if year-on-year inflation fell below 6 percent by the end of September and the IMF board itself if it fell below 4 percent.
In September, annual urban consumer price inflation edged up to 3.7 percent from 3.4 percent in August, the country’s statistics agency CAPMAS said on Saturday.
The low inflation rate sharpens a dilemma for the central bank: whether to keep interest rates high to sell treasury bills and protect the currency, or lower them to encourage growth in an economy battered by the COVID-19 pandemic.
Some economists have said that if inflation remains low, the IMF could argue the central bank’s monetary committee should consider lowering interest rates when it next meets on Nov. 12.
The slight increase in September inflation went against some analysts’ forecasts, who had expected the headline rate to be kept under pressure by lower food prices. However, CAPMAS said food costs increased by 0.3 percent month-on-month.
The August inflation rate was near the lowest since 2005.
Inflation soared to a peak of 33.0 percent in July 2017 after Egypt implemented IMF austerity measures including a fuel price hike, a 13 percent value-added tax and taxes on tobacco, while halving the value of the currency against the dollar.


Sweden bans Huawei, ZTE from upcoming 5G networks

Updated 15 min 42 sec ago

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.