Egypt’s 2014 in Review: 20 Political and Economic Milestones

Big 5

2014 was as rich in political and economic milestones changes for Egypt, Amwal Al Ghad English demonstrates top 20 events occurred during this year.

1- Abdel Fattah al-Sisi sworn in as Egypt’s President- 8th of June

On 8 June 2014, Abdel Fattah al-Sisi was sworn into office to become the sixth and current President of Egypt.

Sisi as the chief of the Egyptian Armed Forces played the leading role in ousting President Mohamed Morsi after an uprising against him in 2013

On 26 March 2014, amid calls for Sisi to run for president, he resigned from the military announcing he would stand as a candidate in the 2014 presidential elections.  On social networks, thousands of Egyptians changed their profile pictures to pictures of al-Sisi, while others started campaigns requesting that El-Sisi be promoted to the rank of field marshal, while others hoped he would be nominated in the next presidential elections.

Presidential elections 2014 came almost a year after the June 2013 protests that prompted al-Sisi to depose Egypt’s then-president Mohamed Morsi.

During the period between 26 and 28 May 2014, the presidential elections took place. There were only two candidates, former Egyptian Defence Minister Abdel Fattah el-Sisi and Egyptian Popular Current candidate Hamdeen Sabahi.

The elections, which were planned to take place for two days were extended to a third day. Official figures showed 25,578,233 voted in the elections, a turnout of 47.5%.

Abdel Fattah el-Sisi was declared the winner after attracting 22 million of the nearly 23 million votes cast (23.78 million votes, 96.91%) while Sabahi ran second with less than 4% of the vote.

Sisi’s oath was held in Egypt’s Supreme constitutional court in front of deputy head of the constitutional court, Maher Sami, who described el-Sisi as a “rebel soldier” and a “revolutionary hero”.

On 6 December 2013, el-Sisi was named “Time Person of the Year” in Time magazine’s annual reader poll.

2- Egypt Opens Second Stage of Third Cairo Metro Line

On May 7th, Egypt’s President Adly Mansour, Prime Minister Ibrahim Mahlab and Transportation Minister Ibrahim El-Demeiri has inaugurated the second phase of Cairo’s underground third line, at total cost of EGP 12 billion (US$1.7 billion).

3- Egypt Cuts Spending on Energy Subsidies by a Third in New Budget

In June, Egypt has slashed spending on energy subsidies by almost a third in its budget for 2014-15 in an effort to reduce a deficit that reached an estimated 12 per cent of gross domestic product in the last fiscal year, following three years of political upheaval.

Hany Kadri, finance minister, said the allocation for fuel subsidies has been cut from around EGP144 billion ($20 billion) last year to EGP 100 billion in the new budget.

Egypt’s President Abdel Fattah el Sisi has defended his recent decisions to partially scrap subsidies on fuel, calling them a necessary “bitter pill”.

In a nationally televised speech on Monday, Sisi said he could not delay such decisions even if it cost him support because “the dangers are great” for Egypt’s economy.

International oil companies welcomed the Egyptian government’s decision to slash subsidies on fuel and natural gas, which took effect over the weekend.

A spokesperson from Royal Dutch Shell said the company supported the reduced subsidy, although he would not disclose how much money it was owed from Egypt.

“The current subsidy burden affects [state-owned oil company] Egyptian Gen­­eral Petroleum Corporation’s fin­ancials and profitability significantly, impacting on its ability to pay its receivables to international oil companies (IOCs),”

“Energy subsidies also burden the government, which in turn forces the government to impose a ceiling on gas prices, dampening the investment incentive for IOCs and affecting the long term supply of gas.”

Another oil industry source agreed that the move was “a step in the right direction for the Egyptian economy” and was “something that needs to happen for the government to start repaying its bills”.

4- Sisi Sets New Maximum Wage Cap for Public Sector

On July 3rd, President Abdel Fattah al-Sisi has set a new limit on the maximum wage in the public sector, capping it at EGP 42,000 per month.

The maximum wage is now set at 35 times the new minimum wage, which was boosted up to EGP 1,200 per month by former Prime Minister Hazem al-Beblawi’s Cabinet.

The amended maximum wage law applies to those working in the governmental sector, municipalities, national authorities and state-owned services and economic institutions.

5- Egypt Plans to Dig a New Suez Canal worth $4 billion

On August 5th, Egypt announced it plans to build a new Suez Canal alongside the existing 145-year-old historic waterway in a multi-billion dollar project to expand trade along the fastest shipping route between Europe and Asia.

The project, to be run by the army, is a major step by new President Abdel Fattah al-Sisi to stimulate Egypt’s struggling economy and recalled some of the grand national programmes of one of Sisi’s predecessors, army strongman Gamal Abdel Nasser.

The new channel, part of a larger project to expand port and shipping facilities around the canal, aims to raise Egypt’s international profile and establish it as a major trade hub.

“This giant project will be the creation of a new Suez Canal parallel to the current channel of a total length of 72 kilometres (44.74 miles),” Mohab Mamish, authority chairman, told a conference in Ismailia, a port city on the canal.

He said the total estimated cost of drilling the new channel would be about $4 billion and be completed in five years, though Sisi said he hoped it would be finished within a more ambitious one-year deadline.

6- Egypt Awards Suez Canal Mega Project to Gulf-based Dar Al-Handasah

On August 18th, Egypt has chosen a consortium including Dar Al-Handasah (Shair and Partners) and its Egyptian partner for its new Suez Canal mega project, Chairman of the Suez Canal Authority and head of the executive council of the Suez Canal Corridor Project Mohab Mamish announced.

The plan includes an industrial hub along a 160 km corridor of barren desert beside the international waterway and a centre for supplies and logistics.

The consultancy – registered in Bahrain, according to Mamish – was chosen out of 14 international firms that met the tender specifications for a massive economic development project in the Suez Canal region.

7- Egypt Signs with 6 International Firms to Dredge New Suez Canal

On October 18th, Egypt signed contracts with six international firms to carry out dredging of the new Suez Canal. The companies are National Marine Dredging Company NMDC.AD of the United Arab Emirates (UAE); Royal Boskalis Westminster (BOSN.AS) and Van Oord, both based in the Netherlands; Jan de Nul Group and Deme Group, both of Belgium; and U.S.-based Great Lakes Dredge and Dock Company (GLDD.O).

8- Sisi Bolsters Nationalist Appeal with $8bn Suez Canal Investment

Abdel Fattah al-Sisi, Egypt’s president, has made the Suez Canal the centrepiece of a vast new public works programme designed to restart the country’s ailing economy and rally political support.

In a bid to access extra finance, state-owned banks are preparing to issue non-tradeable five-year investment certificates open only to Egyptian buyers to raise EGP 60 billion ($8.4 billion) for what is being billed as a historic megaproject that should eventually increase Suez Canal revenue by 260 per cent.

The president last week announced that he wanted to restore the self-confidence of Egyptians through “projects that show that [Egyptians] can and are capable”. He suggested that efficiency and “the speeded-up pace of construction” would help strengthen the state against those seeking to undermine it – a swipe at Islamist and secular critics who accuse him of restoring authoritarian rule.

On August 14th, Prime Minister Ibrahim Mahlab announced in a conference that the project will be funded through investment certificates and domestic debt. He said four banks of Banque Misr, National Bank of Egypt, Banque du Caire and Suez Canal Bank would issue the 5-year certificates with a 12 percent interest rate and quarterly dividends.

The five-year investment certificates have a 12 percent interest rate and pay quarterly dividends and came in 10, 100 and 1,000 Egyptian pound ($1.40-$140) denominations.

The banks also issued certificates in U.S. dollars with a 5.3 percent interest rate and quarterly dividends, in US$1,000 denominations.

On September 16th, the central bank governor announced that Egypt had raised the $8.5 billion it needs to fund a project to expand the Suez Canal.

Hisham Ramez told Al-Hayat TV that the funds had been raised in just eight days after banks issued investment certificates to finance the project, which is aimed at expanding trade along what is the fastest shipping route between Europe and Asia.

9- Sawiris’s OCI Wins Tax Battle, Unveils ‘Huge’ Investments in Egypt

On November 4th, the long-lasting tax dispute between Orascom Construction Industries (OCI S.A.E.), wholly owned by OCI NV, has ended in favour of OCI Company.

The tax dispute was initiated on 6 October 2012, when the former President of the previous regime gave a public speech in which he stated that a number of companies were to be targeted for tax evasion. Shortly thereafter, OCI S.A.E. received an unsubstantiated tax evasion claim related to the sale of its cement assets to Lafarge SA in 2007. This was filed against OCI S.A.E. despite there being no official investigation to support these accusations.

Following the resolution of a tax dispute with Egypt’s tax authority, Egyptian billionaire Nassef Sawiris said on Tuesday his company, Orascom Construction Industries (OCI S.A.E.), would make “huge” investments in Egypt.

“Our first investment is going to be presented to the government … for a multi-billion dollar project related to the power sector in partnership with a prominent Middle Eastern group,” Sawiris, one of the richest men in the country, told Reuters.

On November 5th, Orascom Construction, the Engineering & Construction Group and the International Petroleum Investment Company (IPIC), announced Wednesday their intention to jointly and immediately commence studies to develop, construct, and operate a coal-fired power plant in Egypt.

The power plant is expected to have a capacity of up to 2,000 to 3,000 megawatts (MW), utilizing advanced clean-coal technology that complies with EU standards for emission control.

In a statement on Tuesday, OCI N.V. said the Egyptian Tax Authority’s (ETA) Independent Appeals Committee, the responsible body overseeing the tax dispute between OCI N.V.’s subsidiary, OCI S.A.E., and the ETA, has ruled in favor of the Company.

10- Egypt’s Efforts to Return Relations with Russia

In November 2013, Egypt’s Abdel Fattah al-Sisi and Foreign Minister Nabil Fahmy met with their Russian counterparts, Defense Minister Sergei Shoigu and Foreign Minister Sergey Lavrov who were on a visit to Cairo.

Egyptian and Russian leaders exchanged two rounds of four-way visits in both Cairo and Moscow

Sisi made his second visit on August 12 at the Black Sea resort of Sochi in which both him and Putin agreed on boosting bilateral cooperation between the two countries.

Putin promised to speed up arms sales to Egypt. “We are actively developing our military and technological cooperation,” Putin told Sisi. He added that a corresponding protocol was signed in March and that weapons are being delivered to Egypt.

Sisi’s first visit to Russia was on Febreuary 2014 when he was still Egypt’s defense minister

Also, trade and economic investment plans were also announced during the meeting. Putin said that Egypt was discussing a free trade zone with the Russian-led Eurasian Customs Union which also includes Belarus and Kazakhstan.

Additionally, both leaders have discussed plans to establish a Russian industrial zone in the New Suez Canal project that was recently inaugurated by Sisi, as well as another plan to renew and redevelop important projects that were established by the former Soviet Union.

In September 2014, a preliminary deal was reached between both countries to buy arms worth $3.5 billion from Russia.

Moreover, Russians constitute the largest group of outsiders to visit Egypt, while Russia is popular with Egyptian tourists as well.

11- Mubarak Declared Innocent in Deaths of Protesters

On November 29th, Egyptian court has thrown out charges against former President Hosni Mubarak, his interior minister and six aides over the killing of protesters during the 2011 uprising against him.

Mubarak and his sons Alaa and Gamal were also cleared by Chief Judge Mahmoud Kamel al-Rashidi of corruption charges related to exporting gas to Israel.

After the sentence, Mubarak’s supporters leapt out of their benches in celebration when the judge pronounced the verdict, chanting: “Say the truth, don’t be scared, Mubarak is innocent” while relatives of those killed in the 18-day uprising, outside the court venue, were appalled at the ruling.

However, Mubarak was found guilty in May in another case related to theft of public funds and has been serving that three-year sentence while under house arrest for medical reasons in an army hospital in an upscale Cairo suburb.

12- Over 140 Public Bank Officials Resign to Protest Maximum Wage

Over the last three months of 2014, more than 140 officials in public banks submitted their resignations last week, in protest at the banking sector’s new maximum wage system.

Banks affected by the mass resignation include the Central Bank of Egypt (CBE), Banque Misr, Banque du Caire and the National Bank of Egypt (NBE),

A former NBE official stated that his bank has witnessed the resignation of 5 heads of departments within the bank, including the vice chairman.

The list of recently resigned from the CBE and governmental banks mainly includes the second highest-ranking official in the central bank, Nidal Assar, deputy governor for investment and foreign relations.

13- Egypt in the Eyes of International Rating Agencies & Lenders

IMF’s Lagarde:

On October 10th, Christine Lagarde – Managing Director of the International Monetary Fund said she was “very impressed” by Egypt’s economic reforms, ahead of a long-delayed economic assessment which if positive could help attract investment.“I’m very impressed by what the Egyptian authorities are implementing in terms of reform,” told Al Arabiya’s Lara Habib at the IMF annual meeting in Washington.

Moody’s:

On October 20th, Moody’s Investors Service has changed Egypt’s outlook to stable from negative and affirmed its Caa1 government bond rating.

Key drivers for the outlook change to stable from negative are the stabilised political and security situation, the launch of government initiatives toward fiscal consolidation, signs of a growth recovery and an improvement in macroeconomic stability, and strong support from external donors.

Moody’s has also affirmed the Aaa rating of Egypt’s backed global bond. Egypt’s B3 foreign-currency bond ceiling, Caa2 foreign-currency deposit ceiling and Ba3 local-currency country risk ceilings are unaffected by today’s rating affirmation. The short-term country ceilings for foreign-currency bonds and deposits remain unaffected at Not-Prime (NP).

S&P

On November 15th, the global rating agency Standard & Poor’s (S&P) has affirmed Egypt’s credit rating at B-/B, with Stable Outlook.
The agency said in a statement the improvement in political stability and security situation, as well as the slight recovery of GDP and the financial reforms help boost the country’s economic growth.

IMF

On November 26th, the International Monetary Fund said Egypt needs further subsidy reform to reduce its budget deficit even as recent efforts at an economic overhaul are starting to bear fruit, said. The IMF also called on Egypt to consider a more flexible currency rate policy to help spur investment, create jobs and attract more tourists. The IMF also urged the country to create buffers by raising international reserves and preparing contingency plans in the case of a deteriorating global economy and regional security.

“Energy sector reforms and sizable investments will be critical to reduce energy supply bottlenecks and raise potential growth,” said IMF’s mission chief for Egypt Chris Jarvis.

World Bank:

On December 15th, a senior World Bank official called on Egypt to implement promised legal and bureaucratic reforms ahead of an international conference in March where the government hopes to attract more than $12 billion in investments.

Fitch:

On December 20th, Fitch Ratings upgraded Egypt’s credit rating one step to “B” from “B-” citing structural reforms the government has undertaken including reducing fuel subsidies.

“Fuel subsidy cuts and tax hikes have been implemented as part of a clear five-year fiscal consolidation strategy,” The agency said in statement late Friday.

“Power shortages are being tackled, overdue payments to oil companies reduced, investment laws revised and disputes with foreign investors settled. The measures appear to have strong political backing.”

On 30 January 2013, when ousted president Mohamed Morsi was still in power, the agency cut Egypt’s sovereign rating from “B+” to “B”.

Shortly after Morsi’s ouster on 3 July 2013 following nationwide mass protests against his rule, Fitch further downgraded Egypt’s credit rating to “B-“, citing political turmoil.

14- Egypt receives 10 Apache helicopters from U.S. in November

Egypt received 10 Apache helicopters from the United States in the past week, security sources said on Saturday, a sign of easing tensions between the long-time allies confronting Islamist extremism across the region.

“In August…we released ten Apache helicopters that had been held and they arrived in Egypt in November,” state department deputy spokesperson Marie Harf said at a press briefing.

The United States originally announced in April that it had decided to lift its hold on the delivery of the attack helicopters, imposed last year after the military toppled elected president Mohamed Mursi and cracked down hard on his Muslim Brotherhood supporters.

The Pentagon said in September that the United States would deliver the helicopters, built by Boeing Co., to support Cairo’s counter-terrorism efforts.

15- Egypt and Qatar on the Rocky Road to Reconciliation

On December 9th, Egypt declared acceptance of a Gulf initiative, spearheaded by Saudi Arabia, for reconciliation with Qatar.

The states of the Gulf Cooperation Council (GCC) announced that the Gulf dispute with Qatar was over at the end of a special meeting held in Saudi Arabia on Nov. 16. The council decided to reinstate the ambassadors of Saudi Arabia, the United Arab Emirates (UAE) and Bahrain to Doha, after Qatar vowed not to meddle in the affairs of the member states and to cease media criticism through Qatari channels.

On December 24th, Egyptian and Qatari intelligence officials have met in Cairo to discuss reconciliation as part of Saudi-brokered efforts to end an 18-month standoff over Doha’s support of the Muslim Brotherhood, security and diplomatic sources said.

“Talks are under way to organise a meeting between the Egyptian president and the emir of Qatar,” an Arab diplomatic source told AFP.

Egypt’s relations with Qatar have been on-and-off since the days of Hosni Mubarak’s rule. They hit an all-time low after the current Egyptian president, Abdel Fattah El Sisi, led the July 2013 military removal of the Doha-backed Mohammed Morsi of the Muslim Brotherhood.

16- Sisi in China for Diplomatic Rebalancing

On December 24th, Egyptian President Abdel-Fattah al-Sisi has made his first visit to China where he met with Chinese President Xi Jinping is part of the compatible approach and policies of both countries and presidents regarding political, economic, regional and international issues.

President Sisi began his historic official visit to China, declaring:

“Egypt will be a mainstay in the initiative of Chinese President Xi Jinping to revive the ancient China’s Silk Road trade route.”

In his speech before the Egyptian-Chinese business council, Sisi added that the new Suez Canal Development Project will be crucial in the Silk Road initiative.

China was ready to upgrade its relations with Egypt in political, economic, commercial and military fields and on the official, parliamentarian and popular levels.

On 15 December 2014, Chinese Vice President Li Yuanchao announced that China would give Egypt a $24.7m non-refundable grant (CNY 150 million), during his meeting with Egyptian Foreign Minister Nabil Fahmy in Beijing, China.

In addition, China has on eased travel warnings for its citizens to Egypt ahead of the Fahmy’s second visit to the Asian continent, according to Spokesman for the Ministry of Foreign Affairs said on December 13.

During Sisi’s visit, the two nations have signed 25 agreements, mainly in energy and transport, according to the State Information Service of Egypt. High on the agenda are economic development projects and cooperation in science and technology.

Some of the highlights so far include:

  • Discussion on the construction of a high-speed train to connect Alexandria, on the Mediterranean coast, south to Aswan, near Sudan;
  • An electric railway network in the densely populated Cairo-Nile Delta region;
  • Meetings with private Chinese companies at which El Sisi will sign agreements with the Egyptian-Chinese Business Council, and hold meetings first with representatives of China’s top 20 economic groups, and then with 100 companies and 25 tourism companies.

Sisi have also visited one of China’s main industrial hubs, the city of Chengdu, to tour factories and plants specializing in energy and technology.

On December 27th, Huawei’s Chairwoman Sun Yafang met Egyptian President Abdel Fattah al-Sisi to discuss ways of expanding cooperation between Egypt and Huawei in areas such as communications networks and ICT construction.

17- AVIC to Cooperate on Egypt’s $1.5bn First Electric Traction Railway Project

On December 29th, Egyptian Transport Minister Hany Dahy announced that Egypt had finalised an agreement with China’s leading state-owned AVIC to cooperate on building first electric traction system project in Egypt. The project will be with investments worth US$1.5 billion.

The Egyptian minister further said the electric traction project would help reduce traffic disruptions in Cairo.

The new two-way railway will connect cities of El-Salam, Obour, New Heliopolis, Shorouk I and II, 10th of Ramadan and the country’s new capital.

18- Egypt: Foreign Energy Companies’ Debt Arrears 

Egyptian Oil Minister Sherif Ismail announced on December 31st that Egypt has paid $2.1 billion of its overall debt to foreign energy companies, announced adding that it reduced the total accumulated dues to $3.1 billion.

The minister added that Egypt paid $1.5 billion in December 2013, and another $1.4 billion in October 2014.

19- Ethiopia-Egypt Boosted Trade Ties to ease River Nile Row

In November, Egypt and Ethiopia have signed a series of trade agreements which could help smooth diplomatic tensions over use of the River Nile waters.

On December 29th, An Ethiopian Water and Energy Ministry official revealed that his country had resolved its differences with Egypt over a study commissioned to assess the likely impact of a multibillion-dollar hydroelectric dam now being built by Ethiopia on the Nile River.

Accordingly, a three-party committee on the dam – made up of Ethiopia, Egypt and Sudan – will soon resume discussions, Bizuneh Tolcha, head of public relations at the ministry, told The Anadolu Agency.

20- Egypt’s Wheat Supplies

On December 30th, the Egyptian Ministry of Supply and Internal Trade announced that approximately 120 million tons of wheat will arrive in January 2015, marking the delivery of all contracts signed between Egypt and Russia during 2014,. The supplied wheat will be sufficient until the end of April 2015, the ministry added.

The ministry added that the contracts with Russia are binding and that there is no delivery crisis. Earlier this month, President of the Agricultural Professions Syndicate, Abdel-Salam Gomaa, assured that Egypt’s wheat imports were not affected by the US and EU economic restriction on Russia’s grain exports.

During 2014, the Egyptian government mainly imported wheat from Russia, Romania, Canada, France, Argentine, the US and Ukraine.

In October, the government has begun taking steps to convert Egypt into a global logistics centre for the handling and storage of grain and food commodities according to Prime Minister Ibrahim Mehleb. Damietta has been identified as the first site in which logistics operations will begin.

Minister of Supply and Internal Trade Khaled Hanafy announced that three international logistics centres for food commodities are to be constructed in Damietta, East Port Said, and Safaga.

Hanafy said that the grain centre will protect Egypt and the Arab region for the fluctuations witnessed in the wheat market.

Egypt’s global logistical centre will be a key tool to protect Egypt from fluctuations of international wheat market, said Egyptian minister of supply.

Comments
Loading...