CAIRO/ABU DHABI: Egypt has been buying wheat on global markets at a breakneck clip in recent months in what grain traders say is an effort to keep up with its cash-strapped population’s growing reliance on subsidized bread.
The acute political sensitivity of the availability and price of the staple leaves the government with little choice but to ensure supplies, despite an economic crisis caused by six years of drift since an uprising ended Hosni Mubarak’s 30-year rule.
In the past two weeks, state grain buyer General Authority for Supply Commodities (GASC) has purchased nearly 1 million tons of wheat, or more than 20 percent of what it bought all of last year, official figures show.
Traders said the flurry of imports reflects a new reality in a country that already imports more wheat than any other: Egyptians are eating more of the state’s bread, straining its finances and piling on the pressure to maintain supplies.
Three Cairo-based traders said monthly state wheat consumption had jumped by up to 200,000 tons since November. The Supply Ministry put the increase lower and said extra imports were not due to consumption, but meant to boost stocks.
One trader said the two were linked: “Wheat consumption increased from 700,000 tons to 900,000 tons. So they need to increase their strategic reserve,” he said, declining to be named because he, like the other traders, was not permitted to speak on the record.
Living costs have exploded since the import-dependent country floated its currency in November, roughly halving its value and slashing many Egyptians’ real income overnight.
With inflation on food and beverages topping 40 percent in February, the notable exception is pita bread, a subsidized staple untouched since 1977 — when then-President Anwar Sadat provoked nationwide riots by announcing a cut in the subsidy.
Last week rare protests took hold in cities across Egypt after a minor reform to cut down flour smuggling by bakers inadvertently left thousands without their daily rations. Although small, they showed what could happen if imports do not keep pace with demand or prices go up.
“The bread subsidy will not be touched,” Supply Minister Ali Moselhy said at a snap news conference just after the protests.
Forty years after the Sadat-era bread riots established the subsidy as a political red line, the pita is still offered for just 0.05 Egyptian pounds ($0.0028) per loaf, which today is about one-tenth its free market price.
The currency float was the opening salvo in an ambitious economic reform program that includes tax hikes and energy subsidy cuts, in return for a three-year $12 billion International Monetary Fund (IMF) loan.
Three bakers of subsidized bread said business had since boomed; one said he uses 30 bags of flour a day instead of 20. “Rice and macaroni are expensive and there are no other alternatives,” said head of the bakers’ association Abdullah Ghorab, who represents over 25,000 bakeries countrywide and estimates consumption has jumped up to 15 percent.
Sohaier Saaed, a 40-year-old mother of four awaiting a fresh batch of bread, said she had gone from buying the pita now and then to getting it every day. “Prices have all gone up. We cannot live like this,” she said.
GASC, a global buyer of wheat so large it moves world prices on the back of its outsized tenders, appears to be struggling to keep up. The three grain traders, citing data from the GASC, told Reuters state wheat consumption was up from about 700-750,000 tons per month in November to around 900,000 tons currently.
A Supply Ministry spokesman told Reuters the figure had been around 800,000 tons per month for the past three months, and that higher importing was part of a strategy to raise the level of reserves held in the country. The ministry put reserves this week at over 3 million tons, which it said is enough for four months.
While the previous level of reserves also covered four months, it had included orders for grain not yet delivered.
Over the past two months GASC has purchased 2.38 million tons of wheat, including two mammoth back-to-back tenders in the past two weeks that total nearly 1 million tons. The buying spree brings its 2016-17 season total up to about 5.6 million tons, a nearly 25 percent leap from the 4.5 million purchased last year, according to Reuters data.
More large tenders may be in the pipeline, because Egypt typically taps global markets until April, when its local harvest begins.
Egypt’s wheat imports hits new highs
Egypt’s wheat imports hits new highs
Saudi Arabia’s refined crude exports hit 23-month high at 1.54m bpd
RIYADH: Saudi Arabia’s refinery crude exports surged 23 percent in September compared to the previous month, to reach 1.54 million barrels per day – the highest level for almost two years.
According to figures from the Joint Organizations Data Initiative, the increase to a 23-month high was fueled by strong demand for refined products, including diesel, motor gasoline, aviation gasoline, and fuel oil.
Diesel led the export mix, accounting for 47 percent of shipments, with volumes rising 35 percent month on month to 727,000 bpd. Motor and aviation gasoline made up 23 percent of exports, while fuel oil contributed 7 percent.
Refinery output in Saudi Arabia remained steady at 2.76 million bpd, with diesel representing 44 percent of refined products, followed by motor and aviation gasoline at 25 percent, and fuel oil at 17 percent.
Crude oil exports rose modestly by 1.41 percent to 5.75 million bpd, while production edged down by 0.19 percent to 8.97 million bpd.
Despite the rise in exports, domestic petroleum demand dropped sharply by 267,000 bpd to 2.62 million bpd, possibly due to seasonal factors and improved efficiency.
OPEC announced in November that eight key OPEC+ nations, including Saudi Arabia, Russia, and Iraq, have agreed to extend voluntary production cuts of 2.2 million bpd through December.
Initially introduced in 2023 to stabilize the oil market, the cuts reflect the group’s commitment to the Declaration of Cooperation, with plans to offset overproduction by September 2025. Iraq, along with Russia and Kazakhstan, reaffirmed adherence to the agreement and compensation schedules earlier this month.
Direct crude usage
Saudi Arabia’s direct crude oil burn dropped significantly in September, falling by 296,000 bpd compared to August to 518,000 bpd — a 36.4 percent decline and the lowest level in five months.
This decline is largely attributed to seasonal temperature changes, as the weather begins to cool from the peak summer heat, reducing the demand for air conditioning and, consequently, the need for crude oil in power generation.
Compared to September last year, the lower burn levels also reflect the Kingdom’s ongoing efforts to enhance energy efficiency and diversify its power sources.
By expanding its natural gas network and scaling up renewable energy projects, the Kingdom is reducing its reliance on crude oil for electricity generation, aligning with its Vision 2030 strategy for a sustainable and diversified energy mix.
More than 70 Saudi firms travel to Poland, Slovakia to boost trade ties
JEDDAH: Representatives from 72 Saudi firms are part of a group visiting Poland and Slovakia in a bid to increase trade with the European countries.
Delegates from Federation of Saudi Chambers are also part of the trip, which will see high-level economic meetings involving senior government officials and private sector representatives. Their objective is to explore investment opportunities and sign several agreements and commercial partnerships.
The delegation, led by Chairman of the Federation of Saudi Chambers Hassan bin Mujib Al-Huwaizi, includes over 72 business representatives from various economic sectors, along with governmental entities and authorities, according to the Saudi Press Agency.
In August, the Kingdom and Poland established a joint business council for the 2024-2028 term to boost trade and investment between the two countries. The move is part of the nation’s broader strategy to deepen economic ties with Europe, with a particular focus on Poland, one of the continent’s largest economies.
Poland has seen impressive growth in its agri-food sector, with exports reaching a record €47.9 billion ($51.1 billion) in 2023 — a €10 billion increase from the previous year.
In 2023, Saudi Arabia’s trade exchange with Poland reached SR33.7 billion. The Kingdom’s primary exports to Poland include mineral products and plastics, while Poland’s main exports to the Arab country consist of tobacco, machinery, and mechanical appliances.
The relationship between Saudi Arabia and Slovakia has also witnessed growth following the official opening of the Slovak Embassy in Riyadh in recent years. Additionally, bilateral trade has increased significantly, highlighting untapped investment opportunities.
The delegation will begin its visit to Poland by holding the Saudi-Polish Business Council meeting, a joint forum, and bilateral meetings between representatives.
In Slovakia, the delegation will host the Saudi-Slovak Business Forum, conduct meetings between companies from both sides and sign an agreement to establish a joint business council.
Through its recent series of international visits to ten countries, the federation is leading efforts to open new markets and opportunities for the Kingdom’s backers and to boost trade and investment exchanges with countries worldwide, in alignment with the aspirations of Saudi Vision 2030.
Blatco, Golden Star Rubber to build Middle East’s largest tire plant in Saudi Arabia
JEDDAH: Saudi Arabia’s Black Arrow Tire Co., or Blatco, has partnered with Thailand’s Golden Star Rubber Co. to build the Middle East’s largest tire manufacturing facility in Yanbu, with a $470 million investment.
The plant will initially produce 4 million tires annually for passenger vehicles, with plans to expand production to 6 million tires per year, including truck and bus tires.
The Yanbu facility is set to boost Saudi Arabia’s industrial capabilities and will create more than 2,000 local jobs. The partnership will supply the facility with the natural rubber required for tire production in the Kingdom.
The Saudi tire market, which produced 22.6 million units in 2023, is projected to grow at a compound annual growth rate of 1.26 percent, reaching 25.5 million units by 2032, according to market research firm IMARC Group.
Largely import-driven, the sector is dominated by Chinese tire brands due to their affordability and availability. However, flagship brands have gained traction in recent years, thanks to their higher quality and longer product lifecycles, the report added.
The ceremony to mark the deal, signed by Blatco Chairman Abdullah Al-Wahibi and Golden Star Rubber Chairman Amir Zafar, was also attended by Hassan Al-Huwaizi, president of the Federation of Saudi Chambers of Commerce, Al-Ekhbariya reported.
The agreement aligns with Vision 2030’s goals to localize industries, transfer knowledge, and support domestic content. The partnership is also supported by the Saudi-Thai Business Council, aimed at strengthening commercial and investment ties between Saudi Arabia and Thailand.
The plant will be situated in the Kingdom’s industrial city on the Red Sea, under the Royal Commission for Jubail and Yanbu. Blatco officials anticipate that 50 percent of production will be consumed locally, with the remainder to be exported to regional markets.
Earlier this year, Blatco signed a 20-year technology export agreement with South Korea’s Kumho Tire. As part of the deal, Kumho Tire agreed to supply Blatco with the technology to produce passenger car tires for the Middle East, including Saudi Arabia.
Founded in Riyadh in 2019, Blatco aims to become a key player in automotive manufacturing and distribution in the region. The company focuses on contributing to Saudi Arabia’s economy, creating jobs, and supporting technology transfer initiatives, according to its website.
In October 2023, the Kingdom’s Public Investment Fund announced a separate $550 million tire factory in a joint venture with Italy’s Pirelli.
PIF holds a 75 percent stake in the venture, with Pirelli providing technology and commercial support. The facility, set to begin operations in 2026, will produce tires for passenger vehicles under the Pirelli brand and a new local brand for domestic and regional markets.
Pakistan PM calls for tax compliance by all sectors amid tough IMF conditions
- IMF’s unplanned visit last week was reportedly prompted by revenue collection shortfall of $685 million during Q1 of current fiscal
- Agreement for a $7 billion loan program approved in September came with tough measures such as raising taxes, privatization
ISLAMABAD: Prime Minister Shehbaz Sharif on Monday called for all sectors to fulfill their tax obligations, days after the IMF concluded an unscheduled visit to Pakistan for discussions on economic policy and reform efforts.
The IMF’s visit last week was widely reported to have been prompted by, among other factors, a shortfall of nearly Rs190 billion ($685 million) in revenue collection during the first quarter of the current fiscal year. The period also saw an external financing gap of $2.5 billion, while Pakistan failed in its bid to sell its national airline, a major setback on the path to privatizing loss-making state-owned enterprises, required by the IMF.
The government wants to increase the tax-to-GDP ratio to 13 percent over the next three years. The ratio stood at 9 percent during 2023-24, according to the Federal Board of Revenue, the country’s main tax collection body.
“Economic development is only possible when everyone fulfills their share of responsibility,” Sharif was quoted as saying in a statement released by his office after he chaired a meeting of his cabinet to review economic policies. “All sectors must pay taxes to contribute to national progress.”
Pakistan’s economy has faced significant challenges in recent years, including high inflation and fiscal deficits. In May last year, the CPI inflation rate hit a record high of 38 percent but has seen a downward trajectory in recent months, moving to 7.2 percent year-on-year in October.
Pakistan has struggled for decades with boom-and-bust economic cycles, prompting 23 IMF bailouts since 1958.
After wrapping up the visit last week, the IMF had said it was encouraged by Islamabad’s reaffirmed commitment to the economic reforms under the Extended Fund Facility its board had approved in September to reduce vulnerabilities.
The external financing gap and failure to sell PIA has prompted fears that Pakistan might need to impose new taxes to bridge the shortfall. But Finance Minister Muhammad Aurangzeb has repeatedly said the shortfall will be met only with enforcement to get people to pay their taxes, implying there would not be any new revenue measures.
Dubai’s annual inflation rate slows to hit lowest level in 14 months
RIYADH: Dubai’s annual inflation rate slowed again in October, reaching its lowest level in 14 months, official figures showed.
According to data released by the Dubai Statistics Center, the emirate’s inflation rate reached 2.4 percent in October, driven by a deeper deflation in transport prices, which fell by 10.6 percent compared to an 8 percent decline in September.
Dubai’s inflation rate has been relatively low compared to other major cities in the region, reflecting the government’s proactive measures to manage price stability and sustain economic growth.
Amid global inflationary pressures, the emirate’s economy has remained resilient, benefiting from diversified sectors such as tourism, real estate, and trade.
In light of global and domestic factors, the UAE Central Bank projects inflation in the country as a whole for 2024 at 2.3 percent, compared to 1.6 percent in 2023, due to a moderate increase in commodity prices, wages, and rents.
The data further indicated a deflation in the tobacco price category to 3.63 percent, similar to that recorded in September.
The figures also showed slower deflation in the information and communication category, which saw an annual fall of 1.92 percent, compared to a decline of 2.05 percent in September.
Recreation, sport, and culture prices witnessed a year-on-year drop of 1.74 percent in October, a smaller decrease than the 2.66 percent seen in the previous month.
The data also revealed that the housing, water, electricity, gas, and other fuels sector witnessed a price increase, with a 7.16 percent surge, compared to 7.02 percent in September.
The insurance and financial services sector also witnessed a rise in prices, with a 5.83 percent rise in October, compared to 5.20 percent in the previous month.
Prices in education, health, and food and beverages also advanced in October. Education rose by 2.94 percent, health by 1.87 percent, and food and beverages by 1.85 percent.
In comparison, September’s increases were 2.94 percent for education, 1.88 percent for health, and 1.81 percent for food and beverages.
The personal care, social protection, and miscellaneous goods and services sector recorded a 1.67 percent jump in prices, while clothing and footwear was up 1.15 percent. Both of these were lower rises than in September.
In 2023, Dubai announced a plan aiming to boost foreign trade and investment in the UAE’s financial hub and “double the size” of its economy by 2033.
