Egypt’s central bank governor resigns as economic woes mount

Egypt’s central bank governor resigns as economic woes mount
Egyptian Central Bank Governor Tarek Amer resigned as the country has struggled to address its financial woes. (AP/File)
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Updated 17 August 2022

Egypt’s central bank governor resigns as economic woes mount

Egypt’s central bank governor resigns as economic woes mount
  • President Abdel Fattah el-Sissi accepted the resignation of Tarek Amer and named him a presidential adviser
  • The currency is under pressure, sliding in value to about 19 Egyptian pounds to the US dollar

CAIRO: Egypt’s central bank governor resigned Wednesday as the Middle East’s most populous nation struggles to curb inflation triggered by Russia’s war in Ukraine, high oil prices and a drop in tourism.
President Abdel Fattah El-Sisi accepted the resignation of Tarek Amer and named him a presidential adviser, the Egyptian leader’s office said in a statement. The brief statement offered no explanation for Amer’s resignation.
No replacement was immediately named for Amer, who had been appointed governor of the central bank in November 2015. He has been criticized for his handling of Egypt’s financial challenges.
The currency is under pressure, sliding in value to about 19 Egyptian pounds to the US dollar. That followed a central bank decision allowing the currency to depreciate by around 16 percent in March to try to stem a growing trade deficit.
“It seems there’s a lot of tensions within policymaking circles, and I think that’s ultimately what led to Mr. Amer’s resignation,” said Jason Tuvey, a senior emerging markets economist at Capital Economics.
Tuvey said there are officials that oppose devaluing the pound and instead support measures like rationing gas consumption by curbing electricity usage, which could in turn harm business activity. Amer had traditionally been seen as in the camp that supported the pound’s depreciation as a way to secure a loan from the International Monetary Fund.
The London-based Capital Economics research firm predicts that Egypt’s currency will continue to slide, reaching 25 pounds to the dollar by the end of 2024 amid sustained pressure.
The resignation of the central bank head comes after key ministries were reshuffled Saturday as the government faces mounting pressure from economic challenges. The Cabinet shake-up, which was approved by parliament in an emergency session, affected 13 ministries, including health, education, culture, local development and irrigation. The country’s minister of tourism and antiquities also was replaced.
Egypt’s expansive tourism industry, which employs millions, was hit hard by years of turmoil, the COVID-19 pandemic and then the war in Ukraine. Prior to the conflict, around a third of tourists to Egypt came from Russia.
Russia’s war has been deeply felt in other ways in Egypt, the world’s largest wheat importer that sources around 80 percent of it from the Black Sea region.
In the first weeks after the invasion of Ukraine in late February, the price of wheat and other grains skyrocketed, as did the price of fuel. Although prices have come down somewhat, the cost of grains remains at least 50 percent higher than before the pandemic in early 2020. Furthermore, the cost of shipping to export those grains through the Black Sea is high.
Inflation in the country of 103 million people reached 14.6 percent in July, increasing pressure on lower-income households and everyday necessities. Around a third of Egyptians live in poverty, according to government figures.
The World Bank notes that Egypt’s government announced an assistance package worth 130 billion pounds (more than $8 billion) just before devaluing the pound in March to alleviate the impact of rising prices. The package aimed to increase public-sector wages and pensions, as well as expand direct cash assistance programs.
Egypt’s Gulf Arab allies have come to its assistance with multibillion-dollar investments buoyed by high oil prices that have helped their bottom line.
Saudi Arabia’s sovereign wealth fund, known as the Public Investment Fund, recently established a division in Egypt that has already announced deals worth $1.3 billion with the aim of bringing in $10 billion into Egypt.


TASI drops below 11k for the first time in over 9 months as the market trembles: Closing bell

TASI drops below 11k for the first time in over 9 months as the market trembles: Closing bell
Updated 7 min 33 sec ago

TASI drops below 11k for the first time in over 9 months as the market trembles: Closing bell

TASI drops below 11k for the first time in over 9 months as the market trembles: Closing bell

RIYADH: Saudi Arabia’s main index dropped below 11,000 points for the first time in nearly nine months thanks to falling oil prices and global recession fears.

The Tadawul All Share Index dipped 2.26 percent at the end of Monday’s trade, reaching 10,909 for the first time since Dec. 12, while the parallel market Nomu shed 0.84 percent to 19,708.

“The markets are likely to continue to be volatile and in jittery mode until inflation is under control.” Fawaz Al-Fawaz, a Saudi-based independent economist and columnist told Arab News.

Oil prices sank to sub-$85 for the first time since January, hot on the heels of aggressive interest rate rises across the world, including by the US Federal Reserve and the Saudi Central Bank.

The market fall was led by a 2.85 percent decline in oil behemoth Saudi Aramco and a 3.92 percent drop in the Kingdom's most valued bank Al Rajhi.

Riyad Bank slid 6.74 percent to lead the fallers, closely followed by Saudi petrochemicals maker Sipchem which was down 6.51 percent.

The Saudi National Bank, the Kingdom’s largest lender, decreased by 1.45 percent, while Saudi British Bank declined by 1.73 percent.

National Agricultural Development Co. shed 1.76 percent, following signing a non-binding memorandum of understanding with the Leha Agricultural Co. to produce potato seeds in Saudi Arabia.

Retal Urban Development Co. gained 3.39 percent, after selling its share in a land located in Al Khobar city for SR67 million ($18 million) to Maali Holding Co.

Anaam International Holding Group gained 5.6 percent to continue leading the gainers since early trade, after reporting that it turned into profits of SR1.6 million during the first half of 2022.

Saudi economist Ali Alhazmi told Arab News that the market direction is unpredictable, but he anticipated the decline to continue this week.

“The decline is from the uncertainty about the global economics, or also the decline of growth and the existence of recession in major economies, especially the US and the EU.”

“We cannot avoid the continued closure in China, which affects supply chains. We also have the ongoing war between Russia and Ukraine.”


Serco opens hub in Riyadh to elevate regional trade

Serco opens hub in Riyadh to elevate regional trade
Updated 26 September 2022

Serco opens hub in Riyadh to elevate regional trade

Serco opens hub in Riyadh to elevate regional trade

RIYADH: British public services firm Serco has opened its new headquarters in Riyadh as the company aims to develop its Saudi-based resources and leverage the location as a driver for local and regional trade.

According to a press release, the new office opened on Sept. 24, a day after Saudi Arabia’s National Day. 

The press release noted that Serco has already formed a specialized team with 15 percent Saudi-national representation, to deliver high-profile contracts with EXPRO and Royal Commission of AlUla. 

The company is also eyeing opportunities in the Kingdom’s smart cities and giga-projects, and these projects will be led by Serco’s Saudi national female country director, Mona Al-Thagafi.

“The opening of this new office, just after National Day on Friday, represents a key milestone for Serco as we fully embrace Saudization. We are already providing rewarding careers for young, local talent and creating many exciting opportunities in the future, for both men and women,” said Al-Thagafi. 

She added that Serco is offering candidates a chance to develop their skills through developmental, graduate and internship programs. 

The press release further added that the new office in Riyadh will also feature an ‘ExperienceLab,’ Serco's user-centered research and design agency, which the company says is “centered around people and innovation.” 

Speaking to Arab News in April 2021, Phil Malem, CEO of Serco for the Middle East region, opened up about the company’s aspirations in the Kingdom. “We are hugely enthusiastic about the potential of the Kingdom and we have tried to grow in line with Saudi Vision 2030. We are passionate about the Saudization program. It’s a key part of our strategy. We have continued to recruit, train and develop skills in Saudi nationals who can make a difference in the organization,” said Malem. 

He also added that Serco is closely following the development of Saudi giga projects including NEOM and The Red Sea Development Co. “We are actively in discussion around the potential of helping,” he said. 


Daman Investments launches UAE IPO fund for institutional investors

Daman Investments launches UAE IPO fund for institutional investors
Updated 26 September 2022

Daman Investments launches UAE IPO fund for institutional investors

Daman Investments launches UAE IPO fund for institutional investors

RIYADH: Dubai’s Daman Investments has launched a UAE initial public offering fund for professional and institutional investors, according to a statement. 

In line with the Gulf country’s plans to develop financial markets, the move will provide investors with higher returns compared to UAE stock market indices. 

Regulated and supervised by the Securities and Commodities Authority, the fund is expected to attract investment firms, professional investors and private family businesses.

“The fund will invest in the upcoming IPOs and in companies which have been listed during the past two years,” CEO Ahmed Khizer Khan said. 

He added the fund is “designed to meet the needs of professional and institutional investors, as it is expected to distribute quarterly and annual profits, respectively.”

This comes amid the rapid developments in financial markets and liquidity rates in the UAE.

In August, the UAE’s net financial surplus increased by 129 percent during the first quarter of this year, according to data from the UAE Ministry of Finance.

The surplus during the first three months of 2022 amounted to 36.4 billion dirhams ($10.1 billion), compared to 15.9 billion dirhams in the same period last year.


Mediterranean Shipping Co. connects Jeddah Port with 10 global ports

Mediterranean Shipping Co. connects Jeddah Port with 10 global ports
Updated 26 September 2022

Mediterranean Shipping Co. connects Jeddah Port with 10 global ports

Mediterranean Shipping Co. connects Jeddah Port with 10 global ports

RIYADH: Geneva-headquartered Mediterranean Shipping Co. will introduce a new call to its Himalaya Express Service to connect Jeddah Islamic Port with 10 global ports, said the Saudi Ports Authority. 

The new addition will link Jeddah Islamic Port with ports of Colombo, Nhava Sheva, Mundra, Salalah, King Abdullah Port, Valencia, Felixstowe, Rotterdam, Hamburg, and Antwerp, according to a statement. 

The service will include 11 mother ships with a capacity of 14,000 twenty-foot equivalent units for each vessel. Its first vessel sailing is expected to arrive at Jeddah Islamic Port on Oct. 23.

The global transport and logistics firm said it’s part of its commitment to serve the Saudi market and to expand import and export operations in the Kingdom’s ports. 

The cooperation between Mawani and MSC will enhance Saudi ports' performance on the investment and logistical fronts.

It will strengthen connectivity between the Kingdom and the world, reflecting positively on the operational efficiency in line with the objectives of the National Transport and Logistics Strategy of positioning Saudi Arabia as a global logistics hub, Mawani said in a press release.


Egypt aims to raise $6bn by selling stakes in state firms to revive economy

Egypt aims to raise $6bn by selling stakes in state firms to revive economy
Updated 26 September 2022

Egypt aims to raise $6bn by selling stakes in state firms to revive economy

Egypt aims to raise $6bn by selling stakes in state firms to revive economy

RIYADH: Egypt is planning to raise $6 billion by June 2023 through selling stakes in government companies as the nation tries to revive an economy badly affected by Russia’s invasion of Ukraine. 

Bloomberg, citing Egypt’s planning minister Hala El-Said, reported that the move will include share offerings to the public or block sales to strategic investors, backed by the country’s sovereign wealth fund. 

She did not reveal the names of the companies which will be listed for an initial public offering. 

The Bloomberg report further revealed that the stakes of some companies owned by Egypt’s army will be sold as a part of this program. 

Earlier this month, Egypt set up a new fund to assist government companies in getting listed on the stock exchange. The pre-IPO fund aims to restructure some state-owned assets and prepare them for stake sales. 

El-Said revealed that the ultimate target is to transfer assets worth $3 billion to the fund within three to six weeks, and it includes the assets of a power plant co-built by Siemens AG. 

The planning minister said that Egypt will conduct road shows in Europe and Asia at the end of October to showcase the investment opportunities in the country. 

She added that sovereign wealth funds within the Gulf and other regions will be approached to buy stakes in Egyptian entities. 

“Sovereign wealth funds are usually long-term investors, they add value in terms of expertise, finance and technology,” she said. The Bloomberg report further pointed out that Abu Dhabi’s ADQ and a unit of Saudi Arabia’s Public Investment Fund have already invested roughly $3 billion to buy shares in Egyptian firms owned by the government. 

Apart from eyeing more foreign investments, Egypt is also negotiating a new loan with the International Monetary Fund. 

Egypt’s fuel and food imports bill has soared as a result of the Ukraine war, and the country witnessed $22 billion in outflows from the local debt market since March 2022. 

Egypt had considered listing 10 government companies on the stock exchange this year, but the Russian-Ukraine crisis apparently delayed the plans.