Good morning, everyone. It’s looking like another slow news day here in Egypt as more and more people sign off for the year.Speaking of, you’re reading the penultimate Enterprise AM issue of 2023.

PSA- We’ll be taking a publication break this coming Thursday through Monday to recharge and gear up to launch new things in 2024. All of our publications will be back in your inboxes at their usual times on Tuesday, 2 January 2024.

HAPPENING TODAY-

Capital gains tax discussion reopened? Officials from the Finance Ministry and the Misr Clearing and Depository Company (MCDR) will meet later today to discuss the long-awaited capital gains tax, Al Borsa reports, citing sources it says has knowledge of the matter. The Finance Ministry wants to publish the tax’s executive regulations next month for the tax to be collected on gains made during 2023, seeing as another delay in implementations could lead to tax collection being pushed back another year.

Remember: A 10% capital gains tax on EGX transactions was supposed to be introduced in January 2022 for resident investors but was later delayed by the Finance Ministry pending the passage of the Income Tax Act amendments. Investors will pay the tax on net portfolio earnings calculated at the end of the tax year, minus brokerage fees.

WATCH THIS SPACE-

#1- Debt-for-nature swap agreement with China in 2024? Egypt is currently in advanced talks with China over a debt swap agreement — dubbed a debt-for-nature — that will see China cancel USD 100-120 mn in Egyptian debt and instead allocate those funds to green projects early next year, Al Arabiya reported, citing what it said was an Egyptian government official. The two sides inked a debt swap MoU in October.

Remember-About 5% of our total external debt was owed to the Chinese as of the end ofJune (pdf), amounting to USD 8.3 bn. This includes a USD 2.5 bn in currency swap with the Chinese central bank.

#2- Ethiopia defaulted on a USD 33 mn coupon payment on Monday as the grace period for the Eurobond coupon payment due 11 December ended. The Ethiopian government has been seeking to renegotiate its debt obligations. Last month, the nation reached an in-principle agreement with bilateral creditors on a suspension of debt service due from 1 January 2023 to 31 December 2024. (Bloomberg)

WAR WATCH-

Palestinian factions are reportedly cool to Cairo’s plan to end war: Hamas and the Palestinian Islamic Jihad (PIJ) have reportedly turned down Egypt’s proposed three-stage plan to end the ongoing war on Gaza, Reuters reports. Though both Palestinian resistance movements denied rejecting the plan, Hamas is reluctant to cede power or engage in negotiations “without a complete stop to the aggression,” a Hamas official said. “The Hamas leadership is aiming with all its might for a complete, not temporary, end to the aggression and massacres of our people.”

We should know what Israel thinks soon: The Israeli War Cabinet met last night to discuss Egypt’s plan, the Wall Street Journal wrote. Israel has shown openness to the plan, with authorities open to negotiations, according to previous reports from Israeli media.

Remembers: Officials from both Hamas and the PIJ were on separate trips to Cairo over the past few days to meet with Egyptian officials to discuss implementing a ceasefire and steps to end the Israeli assault on Gaza.

Israel’s peace prerequisites: Israeli Prime Minister Benjamin Netanyahu wrote an op-ed for the Wall Street Journal outlining the three prerequisites for peace in the region — destruction of Hamas, “demilitarization of Gaza”, and “deradicalize” Palestinian society.

Death toll crosses 20k:At least 20,674 Palestinians have been killed since 7 October. Over 100 Palestinians were killed by Israeli airstrikes on Sunday night, according to Reuters.

More Egyptian-Irani talks: Iran’s Foreign Minister Hossein Amir Abdollahian phoned Foreign Minister Sameh Shoukry for a Gaza-centered conversation, according to an EgyptianForeign Ministry readout. This comes shortly after a similar conversation between Iranian President Ibrahim Raisi and President Abdel Fattah El Sisi.

MORNING MUST-READ-

Devaluation, austerity, and an uncertain future for Argentina: Virtually as soon as Argentina’s eccentric far-right president Javier Milei took office two weeks ago, he devalued the local currency by over 50% — the USD now goes for 800 ARS — and cut government spending. While he told his people that things would have to get worse before they get better, a New York Times deep dive into his policies shows that many in his country, especially those with low income or working in the country’s large informal economy, are struggling.

Don’t worry. Argentina, unlike Egypt, has so far defaulted on its sovereign debt nine times, with warnings that a tenth default is only a matter of time.

Argentina’s new president wants to dollarize: One of Milei’s promises on the campaign trail was to dollarize the country, a move which would make the ARS obsolete as the country adopts the USD as its currency of choice. This would “tie Argentina to the mast,” making it less flexible on monetary policy, according to the folks at our favorite econ podcast Planet Money. “People [of Argentina] kind of have lost faith in their own currency,” they said. Could it work? That depends on several conditions. You can listen here on the web or here on Apple Podcasts (runtime: 24:13).

THE BIG STORY ABROAD-

It is another very quiet morning in the western press as the holiday news slowdown drags on.

Israeli airstrike kills Iranian commander: An Israel airstrike outside Syria’s Damascus killed Sayyed Razi Mousavi, a senior advisor in Iran’s Revolutionary Guards who was responsible for coordinating the military alliance between Syria and Iran. Israel will “pay the price” for Mousavi’s assassination, the Guards said in a statement. (Reuters | New York Times | The Guardian | BBC)

MARKET WATCH-

It’s business as usual at gold shops, member of the gold division at the Federation of Egyptian Chambers of Commerce (FEDCOC) Nadi Naguib told Enterprise, denying claims that gold shops shut their doors after soaring demand pushed prices to record highs. The price of 24 karat gold rose to an unprecedented EGP 3,571 per gram yesterday.

That wasn’t the case for some digital marketplaces: Gold trading platform iSagha suspended gold pricing yesterday due to “instability” and “market manipulation,” it said in a statement.

CORRECTION- In our FX Watch in yesterday’s edition of EnterpriseAM, we mistakenly wrote that the Tax Authority has been charging a 15% value-added tax on services sold in Egypt, instead of 14%. We have since amended the story on our website.

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