World Bank grants Egypt $2 billion AS A PART of the Partnership for Development Programme, the World Bank (WB) offered the Ministry of International Cooperation $2 billion in grants and loans to be allocated in a number of development projects. Minister State of Planning and International Cooperation, Fayza Abul-Naga, revealed that around $880 million of the overall sum will be directed to power projects including financing the Giza Power station and connecting the Gulf of Suez wind energy station to the main electrical grid. A $247 million grant by the WB's institutional Support Fund will be allocated to the ministry employees dealing with international and regional organisations and financial institutions. The 250km-long railway line linking Beni Sweif and Assiut governorates will be modernised by a part of the fund, $330 million, while the remaining $100 million will be used to modernise the irrigation system in the Wadi Al-Gedid region. According to Abul-Naga, there will be further negotiations with the bank for a $400 million loan to finance the second stage of the North Giza power station, and $585 million to finance the South Helwan power station. On another positive note, Germany said it would waive some of Egypt's debts. Egypt and Germany signed an agreement in which the latter affirmed, subject to government consultations, that 240 million euros ($341 million) of outstanding loans may be swapped for development purposes over a period of four years. TE's net profits decline TELECOM Egypt (TE), Egypt's fixed line monopoly, posted an 11 per cent decline in its net profits in the second quarter of 2011 compared to the same quarter of 2010, to reach LE826 million. Investment income mainly from TE's 45 per cent stake in Vodafone declined by 13 per cent during the period due to the five per cent increase in corporate taxes. Moreover, revenues declined due to a reduction in the number of paying customers due to a higher number of disconnections because of nonpayment. The number of fixed line subscribers declined to nine million at the end of June 2011, a 4.3 per cent annual drop versus 9.4 million in June 2010. Management also stated that 750,000 customers have experienced periods without service as a result of sections of copper cable being stolen as the price of the underlying commodity soared. ADSL subscribers reached 1.017 million, exceeding one million for the first time recording an annual increase of 37.3 per cent. Commenting on the results, Beltone Financial kept its buy recommendations for TE's shares with a target price of LE19.61, which is 31.7 per cent higher than the share's price on Sunday. The buy recommendations are based on the "operator's diversified revenue streams and the relative resilience of the telecommunications sector versus other sectors amidst the current political uncertainty in Egypt," said Beltone. On another front, the company's North Cable system, the first Mediterranean cable network to provide commercial service using the sophisticated 40 gigabytes per second (40 GB/s) wavelengths in the Mediterranean region, is launched commercially and is now in service. According to TE's press release, this technology increases the capacity of data transfer to reach what is equivalent to the transfer of over 32,000 high definition (HD) movies in 60 seconds. The cable enables TE to meet the growing demand of its customers and enhances its ability to serve global operators whose international services transit through Egypt, in order to serve the Middle East, Asia and Africa regions. The cable extends over 3,600 kilometres and connects Alexandria (Egypt) to Marseilles (France), with a branch to Pentaskhinos (Cyprus), and also includes other branching units for further expansions in the Mediterranean basin. OTH posts net loss of $58 million ORASCOM Telecom Holding (OTH), the Global System for Mobile Communications (GSM) service provider, posted net losses of $58.5 million in the second quarter of 2011 despite improvement in its operational performance. The loss came on the back of the application of the new tax law which resulted in $58 million in additional taxes, almost wiping off the gains from the sale of OTH's Namibian unit. Another factor that led to the loss is the higher-than-expected interest expense, $129 million, in relation to the refinancing of OT's debt, to comply with its deal with VimpelCom. Moreover, the company shouldered forex losses from associates of $17 million. These losses came despite the robust performance on the revenues' level in Algeria. Revenues from Djezzy through the second quarter came at $477 million, 5.3 per cent higher than the first quarter and 4.2 per cent higher than the same quarter of 2010 thanks to the tight cost management in Algeria and the phasing out of marketing expenses related to the ban on advertising on national Algerian TV. Inflation slowing down THE ANNUAL inflation rate in urban areas of Egypt, the main inflation indicator, edged down to 10.4 per cent in July compared to 11.8 per cent in June. While most of the components of the index that measures increase in consumer prices declined, the effect of the fall in food prices, being the largest component, had the biggest impact on the overall slowdown. Food price inflation dropped to 16.6 per cent in July from 19 per cent in June 2011. However, on a monthly level, the urban inflation increased to 1.2 per cent in July 2011 after slowing down to 0.4 per cent in June 2011 due to increase in prices of food and beverages along with hotels and restaurants which had their first increase since the 25 January uprising on the back of increased demand in the summer holiday months. With the slowdown in inflation and prospects of Egypt's speedy economic recovery unlikely, and on the back of the new developments in the global economy, Beltone Financial ruled out that the Central Bank of Egypt (CBE) would increase interest rates in its upcoming meeting on 25 August, keeping key policy rates unchanged at their current levels of 9.75 per cent and 8.25 per cent for the overnight lending and deposit rates respectively.
