Egypt’s Finance Minister Says Cutting Inflation Is Priority 

Muslims arrive at a field during sunrise to offer special morning prayers to start the Eid al-Fitr festival, which marks the end of the holy fasting month of Ramadan in Abu Sir on April 10, 2024. (AFP)
Muslims arrive at a field during sunrise to offer special morning prayers to start the Eid al-Fitr festival, which marks the end of the holy fasting month of Ramadan in Abu Sir on April 10, 2024. (AFP)
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Egypt’s Finance Minister Says Cutting Inflation Is Priority 

Muslims arrive at a field during sunrise to offer special morning prayers to start the Eid al-Fitr festival, which marks the end of the holy fasting month of Ramadan in Abu Sir on April 10, 2024. (AFP)
Muslims arrive at a field during sunrise to offer special morning prayers to start the Eid al-Fitr festival, which marks the end of the holy fasting month of Ramadan in Abu Sir on April 10, 2024. (AFP)

The Egyptian government's main priority is to reduce inflation to within the central bank's target, Finance Minister Mohamed Maait said on Tuesday, adding that economic growth was expected to rise in the financial year starting in July to 4.2%, from 2.8% this year.

Maait also said the government aimed to sell more state assets, which would reduce the state's role in the economy, allow the private sector more ownership, increase productivity and generate revenue to reduce Egypt's debt.

Egypt's economy has been hurt over the last half year by the crisis in Gaza, which has slowed tourism growth and cut into Suez Canal revenue, two of the country's biggest sources of foreign currency. Revenue from the waterway has fallen by more than 60%, Maait said, speaking during the IMF Governor Talks series in Washington.

The challenges prompted the IMF to expand financial support to Egypt to $8 billion, while Egypt sharply devalued its currency, made its latest pledge to move to a flexible exchange rate, and struck a record $35 billion investment deal with a UAE sovereign wealth fund.

Inflation dipped to 33.3% in March from a record 38.0% in September, far higher than the central bank's long-standing target of between 5% and 9%.

Egypt generated growth over the last decade by financing giant state projects, including a new $58 billion capital in the desert, through a borrowing spree abroad that quadrupled its foreign debt.

The government hopes to lower interest rates to reduce interest payments on debt, Maait said. The central bank so far this year has raised its overnight interest rates by 800 basis points.

The government has put a limit of 1 trillion Egyptian pounds ($20.6 billion) on all public investment, including that of the military, Maait said. The private sector should make up at least 65-70% of the economy, he added.

"Giving the main role to the private sector to lead the country is in the benefit of the state. Why? Because we have close to 1 million young people coming to the labor market looking for jobs every year," Maait said.

"Who will be able to create that? The government cannot create more than 100,000 new jobs. An economy led by the private sector can create 900,000 - even more - jobs, but we have to give them the opportunity."



China Mulls Draft Law to Promote Private Sector Development

A Chinese national flag flutters on a financial street in Beijing. (Reuters)
A Chinese national flag flutters on a financial street in Beijing. (Reuters)
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China Mulls Draft Law to Promote Private Sector Development

A Chinese national flag flutters on a financial street in Beijing. (Reuters)
A Chinese national flag flutters on a financial street in Beijing. (Reuters)

Chinese lawmakers are deliberating a draft of the country's first basic law specifically focused on the development of the private sector, the country’s Xinhua news agency reported.

“The law will be conducive to creating a law-based environment that is favorable to the growth of all economic sectors, including the private sector,” said Justice Minister He Rong, while explaining the draft on Saturday during the ongoing session of the Standing Committee of the National People's Congress, the national legislature.

The draft private sector promotion law covers areas such as fair competition, investment and financing environments, scientific and technological innovation, regulatory guidance, service support, rights and interests protection and legal liabilities.

The draft has incorporated suggestions solicited from representatives of the private sector, experts, scholars and the general public, the minister said.

China left its benchmark lending rates unchanged as expected at the monthly fixing on Friday.

Persistent deflationary pressure and tepid credit demand call for more stimulus to aid the broad economy, but narrowing interest margin on the back of fast falling yields and a weakening yuan limit the scope for immediate monetary easing.

The one-year loan prime rate (LPR) was kept at 3.10%, while the five-year LPR was unchanged at 3.60%.

In a Reuters poll of 27 market participants conducted this week, all respondents expected both rates to stay unchanged.

Morgan Stanley said in a note that the 2025 budget deficit and mix are more positive than expected and suggest Beijing is willing to set a high growth target and record fiscal budget to boost market confidence, but further policy details are unlikely before March.

Last Friday, data released by the country's central bank said total assets of China's financial institutions had risen to 489.15 trillion yuan (about $68.03 trillion) by the end of third quarter this year.

The figure represented a year-on-year increase of 8%, said the People's Bank of China.

Of the total, the assets of the banking sector reached 439.52 trillion yuan, up 7.3% year on year, while the assets of securities institutions rose 8.7% year on year to 14.64 trillion yuan.

The insurance sector's assets jumped 18.3% year on year to 35 trillion yuan, the data showed.

The liabilities of the financial institutions totaled 446.51 trillion yuan, up 8% year on year, according to the central bank.

Separately, data released by the National Energy Administration on Thursday showed that China's electricity consumption, a key barometer of economic activity, rose by 7.1% year on year in the first 11months of the year.

During the period, power consumption of the country's primary industries increased by 6.8% year on year, while that of its secondary and tertiary sectors rose by 5.3% and 10.4%, respectively.

Residential power usage saw strong growth of 11.6% during this period, the administration said.

In November alone, power usage climbed 2.8% from one year earlier, according to the data.