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Egypt Population Surge Must Be Met with Job Growth, IMF Says

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  • Egypt Population Surge Must Be Met with Job Growth, IMF Says

Egypt needs to embrace policies that strengthen the private sector and promote job growth in order to cement the gains realized from sweeping economic revival efforts, the International Monetary Fund said.

At the same time, the government can’t afford to delay in moving ahead with cuts in costly energy subsidies or risk straining the budget at a time of higher global oil prices, David Lipton, the IMF’s first deputy managing director, said late Saturday. The comments, to an audience that included Finance Minister Amr El-Garhy, came as an IMF mission is conducting the third review for the $12 billion loan program it granted Egypt in 2016.

“More than anything else, Egypt cannot delay on jobs,” Lipton said, noting that by 2028, Egypt’s working age population will increase by 20 percent — putting the labor force at 80 million. “Creating jobs for all those people has to be Egypt’s biggest economic challenge.”

Key to dealing with this issue, Lipton said, is a “less heavy footprint of the public sector in the economy, especially in business and commerce, to clear away room for the growth of the private sector and to relieve entrepreneurs from the unwinnable match-up of competing with the public sector.”

Growth could rise to 6-8 percent “if this country can tap the potential of its young people—by bringing unemployment and labor force participation to the level of many other emerging market,” he said. “That would be a transformation. It would mean improving living standards for large segments of the population.”

With the IMF’s support, Egypt in 2016 has floated its currency, raised taxes, slashed subsidies and nearly halted increases in public wages — measures the government said were necessarily to avoid economic meltdown in 2016.

Growth has since recovered to more than 5 percent, the budget deficit has dropped, and over $23 billion in foreign money has flowed to the country’s high-yielding Treasury bills, highlighting the return of investor confidence. The benchmark EGX30 equities index rose 20.44 percent since the beginning of 2018, the third-best performer of more than 100 gauges tracked by Bloomberg.

Even with the gains, the government needs to push ahead.

Under its IMF-backed economic overhaul plan, Egypt aims to completely scrap the bulk of energy subsidies in the nation of over 96 million by mid-2019. The target, however, was set in 2016, when the price of Brent crude was significantly lower than $68.59 per barrel it averaged in the past four months.

“Public finances certainly are on a firmer footing, but public debt remains very high,” Lipton said “Delays in following through on the reform of energy subsidies could again leave the budget at risk from higher global oil prices.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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