Happy Friday, ladies and gentlemen. It’s been… quite the week with the news cycle going full throttle at home and in the region, so we hope you all get a chance to wind down before we’re all back at it again.

Come out of your shell and express yourself better with our guide to acting workshops in Cairo. Being a regional hub of theater and cinema talent, Egypt has a wide range of acting establishments to train amateurs, professionals and those seeking to hone their communication skills. Our picks will have a venue for everyone, whether they are looking to make it to the big (or small) screen, a stage — or just cultivate a new skill.

Enterprise Weekend comes out each Friday at 9:00am CLT. We’ll be back on Sunday at 6am with EnterpriseAM. Until then: Enjoy the weekend.

LAST WEEK IN 3 MINS-

We had another macro-heavy news week on the domestic front, with several macro updates, coupled with more downgrades of our economic performance forecasts and ratings. Regionally, Israel’s war against Palestine dominated global headlines.

ECONOMY-

#1- Inflation hit an all-time high of 38% y-o-y in September due to the FX shortage and successive currency devaluations. Consumer prices in urban areas accelerated to 38% y-o-y from 37.4% in August, making September the fourth consecutive month of record highs.

#2- The IMF downgraded its 2024 Egypt growth outlook to 3.6%from its previous 4.1% forecast in July. This is the second time it has lowered its 2024 outlook this year, cutting it to 4.1% from 5.0% in July, citing the shortage of foreign currency and dwindling investor confidence.

…and is urging Egypt to move forward with another currency devaluation or risk the country “bleeding” reserves, IMF Managing Director Kristalina Georgieva said in an interview.

#3- The World Bank sees Egypt’s growth slowing in FY 2023-24 as rising borrowing costs and heightened inflation continue to squeeze economic activity. The lender expects economic growth to slow to 3.7% in the current fiscal year from a projected 4.2% in FY 2022-23, 0.3 percentage points lower than its previous forecast in June.

#4- Moody’s downgraded Egypt’s sovereign credit rating further into junk territory due to worsening debt affordability and an intensifying FX crunch that have raised concerns over our ability to meet repayments. This is seven rungs into junk territory and four above default.

…and followed up with a downgrade of five of our banks’ long-term deposit ratings for the second time in a year. The ratings agency downgraded state-owned lenders Banque Misr, the National Bank of Egypt, and Banque du Caire, along with private-sector bank CIB to Caa1 from B3, seven notches into junk territory and four above default. Intesa Sanpaolo’s Bank of Alexandria rating was also downgraded to B3 from B2.

#5-Several banks have banned the use of EGP debit cards for any FX spending: The National Bank of Egypt, Arab Bank, Banque Misr, Emirates NBD, National Bank of Kuwait in Egypt, AAIB, CIB and Arab International Bank put an end to the use of debit cards linked to EGP accounts for any foreign currency spending.

#6- Egypt generated a current account surplus in 4Q 2022-23 on the back of falling imports and rising tourism and Suez Canal revenues. The current account turned to a USD 560 mn surplus during the April-June quarter, compared to a USD 3.0 bn deficit in 4Q 2021-22 and a USD 3.5 bn deficit in the previous quarter.

#7- Businesses reached an agreement with the government to deliver 15-25% price cuts on key food staples: The government and private-sector food producers and traders will both reduce prices of 10 food items by 15-25% starting Saturday, Prime Minister Mostafa Madbouly said at a press conference last week.

WAR WATCH-

Israel declared war on Hamas after the resistance group launched a surprise ground attack in Israel on Saturday thatkilled hundreds of Israelis… The Israeli government has put in place a total blockade on Gaza, restricting access to food, water and electricity from reaching the strip’s 2.2 mn residents. So far over 900people in Gaza have died in the strikes and 4.6k are wounded. The death toll in Israel from Saturday’s attack by Hamas is now over 1k.

…and it’s looking likely that the war is going to escalate: The Israeli military has amassed tens of thousands of reservists over the past week, which several news outlets take as partial indication that a full-scale ground offensive is “inevitable.”

Tensions on the Egypt-Gaza border have been brewing: Israeli air strikes and artillery targeted the Rafah crossing on the Sinai-Gaza border three times in nearly 48 hours this week, preventing Gazans from crossing the border and aid shipments from reaching the besieged Gaza strip. The Israeli military also threatened to attack any fuel trucks we send into Gaza.

Egypt has been scrambling to de-escalate fighting between Israel and Hamas: President Abdel Fattah El Sisi called the situation “highly dangerous” and confirmed that Egypt is working with other countries to broker an end to the violence.

ENERGY-

#1- Egypt’s gas imports dropped 20% after Chevron halted Tamar production: The closure of the Tamar gas field in the Mediterranean, which came at the request of Israel’s energy ministry over security concerns, caused Israel’s gas shipments to Egypt to slump to 650 mn cubic feet per day from 800 mn cf/d.

ALSO- Chevron suspended gas exports to Egypt via the East Mediterranean Gas (EMG) pipeline and is routing supplies instead through the Arab Gas Pipeline that links Israel, Jordan and Egypt.

#2- Local green methanol on the horizon: Egypt signed a framework agreement with Maersk’s new green methanol company C2X to produce the green fuel in the Suez Canal Economic Zone.

PRIVATIZATION WATCH-

#1- Maersk is one step closer to acquiring half of the 545 MW Zafarana wind farm after signing a framework agreement with the government. The Madbouly government and the Danish shipping giant are now in the final stages of negotiating the value of the 51% stake. The transaction could potentially close by the end of this year.

ELECTIONS 2023-

#1- A third candidate joined the presidential race: The Wafd Party’s Abdel Sanad Yamama filed paperwork with the National Elections Authority to run in the upcoming presidential election.

M&A WATCH-

#1- Dice founders placed their bid to reacquire nearly half of the company: The founders of EGX-listed clothing company Dice Sports and Casual Wear submitted a mandatory tender offer to purchase more than 838 mn of its shares. The transaction would give them control of c. 80% of the company’s stock.

LEGISLATION-

#1- House committees signed off on a spate of key bills: The proposed cut to income tax, the second round of the expat car import scheme, and the decision to allow Abu Dhabi Ports to develop Safaga port were all approved by House committees last week.

DIPLOMACY-

We’re getting less than USD 1 bn in US military aid this year: The new chairman of the US Senate Foreign Relations Committee, Ben Cardin decided to withhold USD 320 mn of human rights-contingent military aid destined for Egypt following the indictment of previous chair Senator Bob Menendez over allegedly accepting bribes to covertly aid the country.

WHAT’S HAPPENING NEXT WEEK-

The World Bank and IMF annual meetings wrap up on Sunday, after kicking off this past week in Marrakech, Morocco.

The House of Representatives reconvenes on Sundayafter going on recess earlier this week.

The Egypt Automotive Aftermarket Exhibitiontakes place from Sunday through Tuesdayat the Cairo International Convention Center.

NOT HAPPENING NEXT WEEK-

The sixth edition of El Gouna Film Festival (GFF), which was postponed to 27 Octoberand will wrap on 2 November.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

YOUR MOST CLICKED LINKS-

  • Lots of you wanted to watch Finance Minister Mohamed Maait’s chat with CNBC Arabia about the IMF completing our review by the end of the year. (CNBC Arabia)
  • The World Economic Outlook that downgrades Egypt’s growth to 3.6% from 4.1% had readers interested. (World Economic Outlook — pdf)
  • Capmas’ inflation data for September was another report that plenty of you wanted to dive into. (Capmas report — pdf)
  • The story on Egyptian banks stopping its use of EGP debit cards outside of Egypt gained some traction. (Bloomberg)
  • A recording of the Rafah crossing’s gate on the Sinai-Gaza border getting shelled got a handful of viewers. (Sinai Tribe X account)

AROUND THE WORLD IN SEVEN DAYS-

The deadly fighting in Israel and Gaza dominated headlines around the world this week: Hamas’ attack on several southern Israeli towns and the Israeli government’s subsequent declaration of war have, so far, claimed the lives of 1k Israelis and 900 Palestinians. The Israeli government has since announced a complete blockade on food, water and electricity from entering Gaza and launched an aggressive airstrike campaign that has pummeled the enclave.

The Nobel prize in economics awarded to a Harvard researcher focused on gender pay inequity got some attention: American economic historian and Harvard professor Claudia Goldin was awarded the 2023 Nobel Prize in economics for her research into pay gaps between men and women. Goldin’s work highlights many of the ways in which the gender wage gap has persisted over time — which in more recent years tends to widen shortly after a woman gives birth to her first child.

China’s real estate crisis also drew interest: China’s largest developer Country Garden is on the brink of default and on track to miss payments on its USD-denominated bonds. Failing to make good on their debts would likely trigger China’s largest-ever corporate debt restructuring. If left unresolved the crisis could set off a wider downturn in the Chinese economy, 25% of which is composed of the real estate sector.

⛅ THE WEATHER THIS WEEKEND- Today’s temperature should reach a high of 31°C during the daytime and drop to a cooler 23°C come nighttime. Tomorrow will be a slightly cooler day with 29°C being the peak temperature and lowering to 21°C in the evening, according to our favorite weather app.

HAPPENING THIS WEEKEND-

The Garden Market is here with music, local brands, handcrafted goods, fresh farm products and vintage finds at Merryland Parktoday.

Oktoberfest is coming to town. Swiss Club is celebrating the festival this morning.Check their Facebook page for more information.

Learn how to translate sketches into a visual journal at an illustration workshop with Keem The Kid at Cocoon Cultural Center every Tuesday, 7-10pm, and Saturday, 3-6pm, from this Saturday, 14 October through to Saturday, 28 October. Sign up using this link.

Handicraft fans — don’t miss Turathna: The annual Turathna exhibition continues until tomorrow, Saturday, 14 October at Egypt International Exhibitions Center, New Cairo. The exhibition is open every day from 9am until 10pm.

A special festival for man’s best friend: Concept festival Bound Fest is happening at Golf andDog Park with entertainment, games, and dog-friendly activities tomorrow. Get your tickets here.

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