Egypt says will not need IMF, World Bank funds

Egypt will not borrow from the World Bank and International Monetary Fund after revising its budget and cutting the forecast deficit, even though a loan had been agreed, Finance Minister Samir Radwan said .

The 2011/12 deficit in the first draft budget was forecast at 11 percent of gross domestic product, but was revised to 8.6 percent because of a national dialogue and the ruling army council's concerns about debt levels, the minister told .

"So we do not need to go at this stage to the Bank and the Fund," Radwan said, adding Egypt, which had borrowed from the IMF under ousted president Hosni Mubarak, still had the "best relations" with the two US-based institutions.

Despite the budget revisions, the government said it still expected growth of 3.0-3.5 percent, in line with previous forecasts, which some economists said could prove optimistic.

Egypt this month agreed on a $3-billion (1.9 billion pounds), 12-month standby loan facility from the IMF, which Cairo had said came with more lenient terms than usually associated with such lending.

The IMF and World Bank had been among a range of foreign countries and bodies to offer funds to Egypt to help cover a big budget shortfall after the economy was plunged into turmoil by the mass protests that drove Mubarak from office on February 11.

Egypt's cabinet had approved on June 1 a budget for 2011/12 that increased spending by a quarter to create jobs and help the poor. That was revised in a new draft announced on Wednesday that included raising income tax and reducing fuel subsidies.

Gulf Arab states are among those who offered support.

Radwan said Qatar had provided $500 million for budgetary support in the past week. "That is a gift," he said, when asked if there were any conditions attached to the Qatari cash.

He said Saudi Arabia had earlier offered a similar amount.

The minister said the first draft of the budget, which forecast a deficit of about 170 billion Egyptian pounds, was discussed with activists, writers, the business community, trade unions and non-government organisations.

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African leaders launch talks on biggest free-trade bloc

South African president Jacob Zuma, centre, King Mswati lll of the Kingdom of Swaziland, left, and Namibia’s president Hifikepunye Pohamba sit together at the opening of the tripartite SADC summit in Johannesburg. 

African leaders Sunday agreed to a framework to guide the next phase of negotiations on creating the continent’s biggest free-trade bloc, in a communiqué issued after a day of talks.

The new bloc would integrate the Common Market for Eastern and Southern Africa, the East African Community and the Southern African Development Community, an idea first backed in 2008.
It would combine 26 countries home to 700 million people with a combined economy estimated at $875 billion.

The bloc aims to enhance connectivity among the nations and reduce costs of doing business, while increasing investment flows to address capacity constraints.

‘It is now well documented that regional integration is one of the four factors that have sustained Africa’s growth in the last decade, as well as the quick and robust recovery from the recent financial crisis,’ said Eratus Mwencha, the deputy chairman of the AU Commission.

‘We all know that trade can act as an engine of growth,’ said Mwencha. ‘For the people of Africa, this will mean a paycheque in their pocket.’

The International Monetary Fund expects Africa to grow faster than the global average in the coming years. Six of the world’s 10 fastest-growing economies were on the continent last year.

Mwencha added that it was projected that Africa would double its GDP in the next ten years, a growth expected to be propelled by the growing middle class.

The mega-bloc would bring together the continent’s most developed economies of South Africa and Egypt and some of its most energetic, such as Angola and Ethiopia.

It is expected to end the challenges presented by the current trade blocs which have different rules, with some countries belonging to more than one grouping, complicating efforts to streamline trade.

‘This Tripartite is blazing a path to be followed by other regions in Africa in realising the dream of a united Africa,’ said Sindiso Ngwenya, general secretary of the Common Market for Eastern and Southern Africa.
‘There are a number of areas where, by building on the work already done by member and partner states, working regionally, we can expect quick wins,’ he said.


But the pact faces immense hurdles: tariff barriers, poor infrastructure, weak supply chains, and economies often largely reliant on natural resources rather than manufactured products.


The three existing free trade areas — of which the five-member East African Community is the most advanced — have failed to meet intra-trade targets despite removing the bulk of trade tariffs.
And the bloc includes countries hit by conflicts, coups and political turmoil, such as Libya, Madagascar, Sudan and Zimbabwe.


New World Bank research says trade within southern African accounts for just 10 per cent of the total in the region — compared to 60 per cent in Europe and 40 per cent in North America.


Southern African Development Community exports increased from 20 to more than 30 per cent of combined GDP over the past decade, but regional trade made up a mere three per cent of the increase.

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Australian Stock Market Report

 the us employment trends index fell from a downwardly-revised reading of 100.1 in April (previously 100.5) to 99.7 in May.

The broader measure of European shares fell for a fourth straight day on Monday on continued concerns about the health of the global economy. There was also an element of caution ahead of the European Central Bank meeting on Thursday. But mining shares rose with BHP Billiton up 0.9pct in London trade and Rio Tinto up 1.0pct. The FTSEurofirst index fell by 0.6pct but while the German Dax was down by 0.3pct, the UK FTSE gained 0.1pct.



US sharemarkets fell again on Monday. Investors continue to fret about the softening economy. And airline stocks fell after global industry body, IATA, halved its profit expectations for 2011. Shares in Delta Airlines lost 3pct. The Dow Jones fell by 61pts or 0.5pct with the S&P 500 down by 1.1pct and the Nasdaq lost 30pts or 1.1pct.

US treasury prices ended little-changed on Monday. There was no major economic data to provide guidance and traders were not keen to take positions ahead of auctions later in the week. Treasury will sell $32 billion of 3-year notes on Tuesday, $21 billion of 10-year notes on Wednesday and $13 billion of 30-year notes on Thursday. US 2yr yields were flat at 0.429pct and US 10yr yields rose 1pt to 3.00pct.

The US dollar clawed back some of its recent losses against major currencies in European and US trade on Monday. The Euro eased from highs near US$1.4655 to US$1.4560, before ending US trade near US$1.4670. The Aussie dollar eased from highs near US107.65c to near US106.90c before ending US trade near US107.05c. And the Japanese yen held between 79.95 yen per US dollar and JPY80.35, ending US trade near JPY80.15.

Crude oil prices fell on Monday in choppy trade on expectations that OPEC oil ministers will raise production quotas at their meeting on Wednesday. On-going instability in the Middle East and North Africa limited losses. The Nymex crude oil contract fell by US$1.21 or 1.2pct to US$99.01 a barrel after trading from US$98.64 to US$100.68 a barrel. And London Brent crude fell by US$1.36 to US$114.48 a barrel.

Base metal prices were mixed on the London Metal Exchange on Monday. The tin price fell 1.5pct and nickel lost 0.8pct but other metals rose 0.4-0.9pct except lead which gained 2.7pct. And the gold price also edged closer to record highs on Monday with Comex gold futures up by US$4.80 an ounce to US$1,547.20.

Ahead: In Australia, the Reserve Bank Board meets to decide interest rate settings. In the US, the Federal Reserve chief Ben Bernanke is expected to deliver a speech. Data on consumer credit and weekly chain store sales are also due.

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