Good morning, folks, and welcome to a new week, in a new month, in a new quarter. We’re ringing in 2Q with another busy newsday, reinforcing our suspicion that the traditional Ramadan news slowdown just isn’t going to happen this year. The headline story: the central bank’s move on Thursday to hike interest rates by 200 basis points in a bid to curb inflation.

THE BIG STORY THIS MORNING-

Last Thursday saw the Central Bank of Egypt go through with its first interest rate hike of 2023. The central bank met most analysts’ expectations with a sizable rate hike of 200 basis points (bps), its first change to interest rates following a combined 800 bps of hikes in 2022. Three of the seven analysts we polled last week were bang on the money — and six of seven expected rates to rise.

But no further deval (yet): The devaluation of the EGP against the USD that some had been predicting to come alongside the rate hike simply … never materialized. The EGP is still changing hands at around 30.96 to the USD according to the official central bank rate. The currency has been holding steady at that rate for the past three weeks, but 12-month non-deliverable forwards are pointing to about EGP 40.00 to the greenback, while the (anemic) parallel market sees the USD changing hands for EGP 35-36.

And no new high-interest certificates coming -NBE: The National Bank of Egypt (NBE) is not launching new high-interest certificates of deposit following the MPC’s decision, Vice Chairman Yehia Aboul Fotouh said Thursday. This came in response to rumors circulating online that the state-owned bank would begin offering new certificates at a 25-30% rate. NBE and Banque Misr both offered record-high 25% yields on one-year CDs for a period of time in January, coinciding with the devaluation of the EGP, which fell 20% during the first two weeks of the year.

We have chapter and verse on the CBE’s rate hike in this morning’s news well, below.

IN EFFECT-

#1- A package of wage and pension hikes is now in effect after President Abdel Fattah El Sisi signed the bill into law on Wednesday, according to theOfficial Gazette. The EGP 165 bn package includes EGP 10 bn to raise public-sector wages and pension payouts, and EGP 85 bn to cover debt service for the final quarter of the current fiscal year.

#2- A bill allowing informal industrial projects to obtain temporary licenses of up to three years was also ratified by the Sisi administration on Thursday. The law gives the Industrial Development Authority (IDA) the power to provide informal industrial establishments with one-year licenses to operate while owners legalize their businesses. The Trade Ministry will be able to extend these licenses by up to two more years on the IDA’s recommendation. Both laws were greenlit by the House last month.

#3- Higher Suez Canal transit fees for oil tankers: As of yesterday, the Suez Canal Authority has raised fees for oil ships transiting the waterway. Tankers carrying crude oil and petroleum products now have to pay a 25% surcharge while their empty counterparts are paying an extra 15%, up from an additional 5% for both laden and ballast vessels.

HAPPENING TODAY-

Welcome to a brand new month — and a brand new quarter. Here’s what to look out for over the next week or two:

  • PMI: S&P Global will release Egypt’s PMI figures on Tuesday, 4 April.
  • Foreign reserves: Expect the central bank to publish March’s foreign reserves figures before the end of this week.
  • Inflation: The CBE and Capmas will be out with March inflation data on Monday, 10 April.

The House is back in session today and tomorrow after a 12-day break.

Near the top of their agenda: Next fiscal year’s state budget is with the House: The FY 2023-2024 budget will be sent to the House Budget Committee today. The committee won’t start discussing the budget until Finance Minister Mohamed Maait and Planning Minister Hala El Said deliver their statements on it to the House at large.

AND- MPs will hold discussions and then vote today on the potential comeback ofdaylight saving time, which would see Cairo Local Time (CLT) pushed forward by one hour from the last Friday of April through to the last Thursday of October. The House Local Administration Committee approved the draft bill last week.

Could changing the clocks save us USD 25 mn worth of natgas per year? That’s the claim in a note from the government to the House ahead of today’s vote. The jury is very much still out among global researchers as to whether daylight savings time is a bonafide energy saver.

Also up for discussion and a vote today:

  • A bill that would fine media organizations and social media users for sharing fake weather news;
  • Three USAID grants for higher education, trade and investments, and economic governance;
  • The Pachin takeover: Prime Minister Moustafa Madbouly will answer questions from opposition MP MahaAbdel Nasser on the sale of state-owned Pachin (we have more on that story below).

SO, WHEN DO WE EAT? We’ll be breaking our fasts this evening at 6:14pm CLT and you’ll have until 4:14am tomorrow to hydrate and have a bite to eat.

WATCH THIS SPACE- Loss and damage fund up and running by November? The landmark loss and damage fund agreed by countries at last year’s COP27 could be established by the time COP28 takes place in the UAE in November, Egypt's lead climate negotiator, Amb. Mohamed Nasr, said Thursday, according to Reuters. Nasr last week led an initial round of discussions in Luxor by a committee responsible for ironing out the details of the fund and implementing the COP27 agreement. “Will it be created? I hope so and I assume so, and this is what we are working towards,” he told an online briefing. “Will it be delivering? I think this is a question of how complex this fund will be, and what will be the governing modalities and the working modalities of the fund.”

SETTING THE RECORD STRAIGHT- The real estate + exchange rate frenzy: Leading real estate developers have denied claims circulating on social media and picked up by the local press that they are indexing homebuyers' payments to the EGP / USD exchange rate or outright canceling sales contracts in the wake of the EGP’s devaluation.

Ora Developers Egypt denied the rumors in a statement(pdf) out on Thursday, saying that the company’s “sale transactions are done in EGP and that the company has no intention of changing the payment currency or linking the price on any units to the USD.” A second high-profile developer we contacted denied it was canceling sales contracts, but declined to comment on the record, citing a policy of not responding to unfounded rumors on social media.

FROM THE RUMOR MILL- Chinese-Saudi consortium eyeing a stake in Elsewedy Electric? A Gulf sovereign fund and a Chinese company are reportedly looking to buy a minority stake in Elsewedy Electric, Shorouk News reports, citing sources it says have knowledge of the potential investments. The potential buyers are currently in talks with their advisors to look into how they might go about the transaction. The company is majority owned by members of the Elsewedy family, with the remainder in freefloat.

OBITUARY- Al Tamimi & Company partner Ehab Taha passed away on Friday. Taha spent more than two decades as a partner at several flagship Egyptian firms, as well as co-founding TMS Law Firm in 2016 and also served as an assistant public prosecutor. He was the head of Al Tamimi’s corporate commercial department.

THE BIG STORY ABROAD-

The Trump news cycle is well and truly back: The man who never saw a headline he didn’t want to be in is once again set to dominate the US news cycle becoming on Thursday the first former president in the history of the United States to be indicted after leaving office. Agent Orange is preparing to face more than 30 criminal charges related to alleged fraud after a Manhattan grand jury voted to indict him, setting the stage for a court appearance this Tuesday. The charges remain under seal but they’re understood to be connected to hush money payments allegedly made to adult film star Stormy Daniels to suppress information related to an extramarital affair.

Trump has been in full Truth Mode over on his social media platform, Truth Social, describing the charges as “political persecution and election interference at the highest level in history” to his 5 mn followers. “This is an attack on our country the likes of which has never been seen before,” he said.

And you thought American politics was toxic before? The indictment will see a criminal case against the most divisive political figure in recent US history progress at the same time as the 2024 presidential election cycle. (Reuters | AP | Financial Times | Bloomberg | Wall Street Journal | BBC | CNBC)

AND- Twitter as the digital bank of Musk’s dreams? Turning the social media platform into “the biggest financial institution in the world” (a USD 250 bn payments empire) is Elon Musk’s latest plan to turn around Twitter, the WSJ is reporting.

Meanwhile in Europe: Finland is set to become a NATO member while Swedenawaits Turkey’s blessings. Turkey was the last of 30 NATO members to approve a bill allowing Finland to join the alliance but is still holding off on Sweden’s membership request. (Reuters)

MORNING MUST READ-

“Let's do something we're both comfortable with.” The most feared sentence among a growing number of people seeking, er, ‘digital love’ from AI chatbots. In response to a surge in use, some developers in the industry are now preventing their technologies from being used for X-rated activities. But moves to make them less licentious are revealing the degrees to which people can become mentally and physically attached to artificial intelligence. Reuters has more.

War there is. Voice recording I must make. The only thing worse than fleeing Russian bombs in Ukraine? Doing so while being reminded how much of a [redacted] the Last Jedi was. That’s what Mark Hamill is accomplishing in his — philanthropic? — decision to lend his voice to air raid alerts in the war torn country. “Attention, the air alert is over. May the force be with you,” Hamill says, reassuring the residents of Bakhmut that the guy who played Luke Skywalker is here to help.

THE REALIGNMENT-

China + Brazil just ditched the USD (in bilateral trade): China and Brazil will conduct bilateral trade — worth more than USD 150.5 bn last year — in their own currencies after agreeing last week to stop using the greenback as an intermediary currency. This is the latest step in a trend toward de-dollarization that, since Washington last year tried to weaponize the USD-based global financial system against Russia for its invasion of Ukraine, has seen a number of countries (including Russia, India, Saudi Arabia, Turkey and Egypt) look to decrease their reliance on the USD in international trade. (AFP)

The brain behind BRIC wants more: Jim O’Neill, the former Goldman Sachs chief economist who first coined the term BRIC (Brazil, Russia, India, China), has called on member nations to accelerate moves to drop the greenback in international trade. “The USD plays a far too dominant role in global finance,” he wrote in a paper last week, noting the destabilizing influence US monetary policy has on developing nations. (Bloomberg)

Riyadh-Beijing ties are growing: Saudi Arabia will become a dialogue partner in the Shanghai Cooperation Organization, allowing it to eventually become a full member of the China-led trade and security alliance. In contrast to its increasingly fractious ties with the Biden administration, Saudi’s relationship with China has warmed significantly in recent months, with the two sides heralding a “new era” in bilateral ties at a joint summit in Riyadh in December. China followed it up by brokering a major agreement between KSA and its arch foe Iran. (Financial Times) Egypt and Qatar also recently became dialogue members of the SCO.

^^ Egypt isn’t separate from any of this: We have more in this morning’s Also on our Radar section, below.

CLARIFICATIONS + CORRECTIONS-

CORRECTION- In Thursday’s edition of EnterpriseAM, we incorrectly referred to ADevelopments — which just landed an agreement with the Sovereign Fund of Egypt to develop the former Interior Ministry HQ in Downtown Cairo — as A Investments. The story has been updated on our web edition.

The Downtown revamp is getting international ink:Bloomberg took note of the project over the weekend.

CLARIFICATION- Ali Afifi has been promoted to vice president at EFG Hermes Research, the research division of EFG Hermes Holding — not the wider holding company as some readers may have inferred from our coverage on Thursday. The story has been amended to clarify this on our website.

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