'How will we live?': Egyptian bread price hike alarms the poor

'How will we live?': Egyptian bread price hike alarms the poor
A vendor counts his money at a bread stand in the Sayeda Zeinab neighborhood of Cairo, Egypt. (AP Photo)
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Updated 07 August 2021

'How will we live?': Egyptian bread price hike alarms the poor

'How will we live?': Egyptian bread price hike alarms the poor
  • First attempt in 44 years to hike subsidized bread price
  • Roughly 30% of Egyptians live on less than $55 a month

CAIRO: Plans to raise the price of bread for the first time in 44 years have shocked Egyptians already struggling to get by in a country where state-subsidised loaves have kept the poorest basically fed since the 1960s.
In declaring this week that it was time to hike bread prices, President Abdel Fattah El-Sisi aims to curb an expensive subsidy program that serves some two-thirds of Egypt’s 100 million people and helped keep political dissent at bay.
“How will we live? And how will we pay for the children of our deceased brother who live with us?” said Wafaa Bakr in Shubra El-Kheima, a dilapidated working-class district sprawling along the outskirts of Cairo.
“The price of a loaf of subsidised bread is a red line — there are widows and orphans who do not have a fixed income,” said Ahmed Saeed in Sharqia, in the Nile Delta north of Cairo.
Some 30 percent of Egyptians fall beneath the government’s poverty line, with incomes below 857 pounds ($54.73) a month. Many struggle without running water or sanitation.
The minimum monthly wage is 2,400 pounds ($153) but that is sometimes not paid in the informal sector, where roughly two-thirds of Egyptians work. Joblessness was at 7.2 percent at the end of last year, and has been chronically higher among young people.
However, economists have said for years that Egypt, the world’s biggest wheat importer and Arab world’s most populous country, must rein in subsidies to modernize its economy.
Bread subsidies now weigh ever heavier on the budget as supply jitters have driven up global wheat prices during the coronavirus pandemic.
Bread subsidies were set at nearly 45 billion Egyptian pounds ($2.9 billion), just over half of the food subsidy bill, for the fiscal year ending in June. This amounts to roughly 1.8 percent of overall state spending.
“It is time for the 5-piaster (0.32 US cent) loaf to increase in price,” El-Sisi said during televised remarks at the opening of a food production plant on Tuesday, referring to a round 90-gram loaf known as ‘eish baladi’.
El-Sisi said he hoped the news would not be poorly received and that the government was not planning a big increase. “It’s incredible to sell 20 loaves for the price of a cigarette.”
The government has already pared back subsidies on electricity and fuel, ushering in annual increases in their price since 2016 as part of market reforms linked to financing from the International Monetary Fund.
Egyptian governments have long exercised caution when it comes to the price of bread, which in Egyptian colloquial speech derives its name from the Arabic word for ‘life’.
An attempt in 1977 by then-President Anwar Sadat to increase bread prices set off deadly riots across Egypt that did not subside until the decision was rescinded.

PRICE ‘NOT SACROSANCT’
El-Sisi’s government has been gradually laying the ground for change, however, notably by rolling out cash transfer programs that better channel state subsidies to the most needy.
“There’s been a long softening-up process for this step, including the reductions in the weight of the loaf from 130g to 110g and then to 90g last August,” said David Butter, an analyst for the Middle East and North Africa at Chatham House.
“So the message that the 5p loaf is not sacrosanct has been out there for some time.”
Some calculations suggest that simply doubling the price to 10 piasters could save up to 4 billion pounds a year, he said.
Hassan Mohammadi, head of the Bakeries Division at the Grain Chamber of the Federation of Egyptian Industries, said the decision was overdue. “People eat the front and leave the back, and they use it as fodder for birds and livestock,” he said, suggesting a 100g loaf should be sold at 10 piasters.
He also suggested a 140-gram loaf should be reintroduced and sold at 20 piasters.
What this means for the poor — for whom the state-subsidised loaf, accompanied by whatever else they can afford, represents a meal — is the heart of the matter for Sheikh Ibrahim Radwan, a preacher in a mosque in the Nile Delta city of Kafr El-Sheikh north of Cairo.
“Mr. President, the poor man gets anything simple (to eat) with subsidised bread. We cannot dispense with that or afford any increase in the cost,” Radwan said, addressing El-Sisi.


China preparing for Evergrande's downfall: WSJ

China preparing for Evergrande's downfall: WSJ
Image: Shutterstock
Updated 47 min 27 sec ago

China preparing for Evergrande's downfall: WSJ

China preparing for Evergrande's downfall: WSJ
  • Local governments have been ordered to assemble groups of accountants and legal experts to examine the finances around Evergrande's operations in their respective regions
  • Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates

Chinese authorities are asking local governments to prepare for the potential downfall of debt-ridden China Evergrande Group, the Wall Street Journal reported on Thursday, citing officials familiar with the discussion.

The move has been characterised as "getting ready for the possible storm" by the officials, according to the report.


The officials said local-level government agencies and state-owned enterprises have been instructed to step in only at the last minute should Evergrande fail to manage its affairs in an orderly fashion, the WSJ reported.


Local governments have been tasked with preventing unrest and mitigating the ripple effect on home buyers and the broader economy, the officials said, according to the report.


Evergrande, China's second-biggest property developer, has $83.5 million in dollar-bond interest payments due on Thursday on a $2 billion offshore bond and a $47.5 million dollar-bond interest payment due next week.


Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.


The company, which epitomised the borrow-to-build business model, ran into trouble over the past few months as Beijing tightened rules in its property sector to rein back debt levels and speculation.


Investors are worried that a downfall could spread to creditors including banks in China and abroad.

 


Luxury operator Chalhoub opens new retail hub in Riyadh

Luxury operator Chalhoub opens new retail hub in Riyadh
Updated 23 September 2021

Luxury operator Chalhoub opens new retail hub in Riyadh

Luxury operator Chalhoub opens new retail hub in Riyadh
  • The new retail development, called “Concept by MUSE”, will bring in local, regional, and international brands, particularly catering to the Saudi youth

DUBAI: Luxury retail operator Chalhoub Group has launched a new shopping destination at the Riyadh Park in the Saudi capital, in a new sign of recovery in the Kingdom’s retail sector post-pandemic. 

The new retail development, called “Concept by MUSE”, will bring in local, regional, and international brands, particularly catering to the Saudi youth, the group said in a statement.

“The retail landscape in Saudi Arabia has evolved significantly over the last few years, especially as young customers become increasingly discerning and attentive to global shopping trends while staying true to their roots and culture,” David Vercruysse, president of managed companies at Chalhoub, said.

Over 1,200 products will be featured at the mall, including the work of five Saudi designers Noms Life, Proud Angeles, Dania Shinkar, Cones and Rods, and Kaf By Kaf.

It follows an earlier initiative of the group to support local Saudi designers by giving them financial grants to build their own fashion brands.

The Kingdom has announced several efforts to modernize its economy, including boosting its local retail market. 

“This world’s first demonstrates our commitment to the Kingdom’s Vision 2030 and support to the country’s ambitions to make Saudi a world-class retail destination,” Bachar Sabbagh, the Saudi director of Chalhoub, said. 


Apicorp launches first green bond framework

Apicorp launches first green bond framework
Updated 23 September 2021

Apicorp launches first green bond framework

Apicorp launches first green bond framework
  • The framework will be used to raise green bonds/sukuk for projects aligned with the UN Sustainable Development Goals

DUBAI: The Arab Petroleum Investments Corporation (Apicorp) has launched its first green bond framework.

It follows the recent approval of the OPEC-created financial institution’s environmental, social, and governance (ESG) policy framework, as it aims to develop the sustainable financial market. 

The framework will be used to raise green bonds/sukuk for projects aligned with the UN Sustainable Development Goals - addressing issues in climate mitigation, circular economy, and biodiversity preservation among others. 

It was created in line with the International Capital Market Association’s Green Bond Principles 2021.

“By launching the Green Bond Framework, Apicorp is providing new avenues for investment in projects and ventures that further the development of safe, affordable, and renewable energy sources,” Ahmed Ali Attiga, chief executive officer of Apicorp. 

He said the framework “reflects our deep understanding of the ESG impact of our investments across the energy spectrum and our commitment to setting out new engagement strategies with our stakeholders to spread awareness of their ESG exposure.”

Apircorp earlier said it will allocate $1 billion towards green energy projects and sustainable energy companies over the next two years. 


Dubai's DAMAC Properties receives approval to take firm private

Dubai's DAMAC Properties receives approval to take firm private
Image: Shutterstock
Updated 23 September 2021

Dubai's DAMAC Properties receives approval to take firm private

Dubai's DAMAC Properties receives approval to take firm private
  • The Dubai real-estate company still plans to offer $595 million for outstanding shares of the company
  • The firm has a market capitalization of over $2 billion

DAMAC Properties, known for its deals with former President Donald Trump said Thursday it had received regulator approval for an effort to take the firm private.


The Dubai real-estate company still plans to offer $595 million for outstanding shares of the company, the firm said in a filing on Dubai Financial Market stock exchange.


It said it would offer an update on the plan in the coming weeks. It earlier announced plans in June for the offer to take the company private, then withdrew them as regulators examined the plan.


The buyout would be through Maple Invest Co. Ltd., a holding company of DAMAC's billionaire founder Hussain Sajwani. Sajwani owns nearly four-fifths of the company through various investment firms.


DAMAC stock traded up Thursday over 3 percent on the news. The firm has a market capitalization of over $2 billion.


DAMAC is known in Dubai for a development that features a Trump-branded golf club surrounded by villas and apartments, making it the only one of its kind in the Middle East that bears the Trump logo.


The company’s partnership with the Trump Organization to manage and run the golf course was struck before Trump’s election as U.S. president.

 


Saudi Arabia’s ‘stc’ becomes one of Moody’s highest rated telecom operators 

Saudi Arabia’s ‘stc’ becomes one of Moody’s highest rated telecom operators 
Updated 23 September 2021

Saudi Arabia’s ‘stc’ becomes one of Moody’s highest rated telecom operators 

Saudi Arabia’s ‘stc’ becomes one of Moody’s highest rated telecom operators 
  • The telecom company’s BCA was revised from a1 to a2, and Moody’s also affirmed its A1 long-term issuer rating

DUBAI: Bond credit rating firm Moody’s has upgraded the baseline credit assessment (BCA) of Saudi Arabia’s “stc”, saying it has maintained “very strong financial metrics.”

The telecom company’s BCA was revised from a1 to a2, and Moody’s also affirmed its A1 long-term issuer rating. 

“The upgrade reflects stc's leading position in the Saudi telecom sector, which has considerable growth opportunities,” Julied Haddad, a senior analyst at Moody’s, said in a recent report.

The ratings agency factors in financial profile, market dominance, and liquidity in deciding on companies’ BCA. 

According to the report, “stc” was able to maintain a conservative financial profile, as well as maintain strong metrics despite several economic factors, including an oil price crash and the COVID-19 pandemic. 

The company has sustained its debt to EBITDA ratio, and has built a strong balance sheet over the years, Moody’s said in a report.

This has given “stc” a headroom to grow organically through investments, the report explained, as well as develop its footprint outside the Kingdom through acquisitions.

“As of June 2021, stc had SR7.7 billion ($2.1 billion) in unrestricted cash and cash equivalents, in addition to SR2.9 billion ($0.8 billion) of short-term Murabaha and SR3.9 billion ($1.0 billion) in the form of investments in a sukuk issued by the Government of Saudi Arabia, which the company can liquidate, should the need arise,” it added. 

The BCA also looked at the competition within the telecom industry in the Kingdom, where “stc” holds 70 percent of market share. 

“Following the upgrade of stc's BCA to a1, the company is now one of the highest rated telecom operators on a stand-alone basis globally,” the report said.

The new “stc” rating could be affected positively if the sovereign rating of the Kingdom is upgraded, Moody’s said.