Good morning, friends, and happy Friday. We hope you have a warm and restful weekend on these very chilly days.

On this cold morning, we think more of people in need. And in our Enterprise Guide this week we will try to help you with some tips to incorporate small acts of kindness into your routine that doesn’t always require grand excursions and lengthy commitments.

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-

ECONOMY-

#1- The Central Bank of Egypt (CBE) hiked interest rates by 200 basis points last night as it looks to preempt an anticipated rise in inflation, the bank said in a statement following its policy meeting. The first hike since August came as “widespread inflationary pressures remain elevated, continuing to impact pricing and consumption behaviours. Moreover, geopolitical uncertainty and ongoing maritime trade disruptions continue to raise domestic and global inflationary pressures,” the bank said.

Where rates now stand: The deposit rate is now at 21.25%, the lending rate at 22.25% and the main operation and disc. rates at 21.75%. The central bank has now hiked rates by 1.3k bps since March 2022.

Only a few saw this coming: While a number of analysts in our customary interest rate poll expected the CBE to keep rates on hold, to be paired — sooner or later — with devaluation when we finalize a new agreement with the IMF, a smaller number anticipated yesterday’s hike. "The latest IMF's comments on the loan program review and ongoing discussions signal a shift in priorities toward inflation targeting, suggesting a probable monetary tightening in the coming months. That said, we expect a 150-200 bps hike," Ahmed Hafez, Head of Research at Beltone Holding, told Enterprise before the meeting. Economist Mona Bedeir also saw the bank moving forward with a 200 bps rate hike “because monetary tightening has become an urgent necessity at the current stage.”

#2- A new IMF package and up-coming devaluation could be in the cards: Egyptian officials appear to be nearing a staff-level agreement with the International Monetary Fund for a new — and bigger— support package.

But there’s no consensus on how big the loan will be, with local and international outlets have put the figure between USD 6-10 bn, while four sources with knowledge of the matter told Enterprise on Tuesday that the agreement nearing completion is worth c. USD 9 bn.

In all cases, the value of the program will include the USD 3 bn the IMF had originally committed, but the exact figure will hinge on if, and by how much, the government chooses to devalue the EGP.

#2- The IMF downgraded our growth forecast to 3.0% for the current fiscal year, down 0.6 percentage points from its last projection in October, in its updated World Economic Outlook (pdf). The Fund also lowered its MENA growth outlook for the year by 0.5 percentage points, now expecting regional growth to pick up to 2.9% in 2024. The Fund pointed to temporary oil cuts in Saudi Arabia as the main driver behind the slashed outlook for the region.

#3- S&P Global Ratings thinks the authorities will devalue the EGP by half, as part of efforts to unlock the remainder of the IMF package, the rating agency said in a report. Once the devaluation is through, S&P sees the EGP trading at “a level that is more in line with the parallel market rate, which is currently at about 60 USD / EGP.” The rating agency thinks that “more clarity on exchange rate policy would benefit trade and economic growth and trigger an increase in remittance inflows.”

BANKING-

A new bank is in town: British multinational bank Standard Chartered ’s newly formed local arm Standard Chartered Egypt has officially begun banking operations after getting the final go-ahead from the central bank, according to a statement (pdf) from the bank on Tuesday.

** We sat down with the lender’s Egypt CEO Mohammed Gad to discuss why Egypt, why now, and what the bank is hoping to achieve in its first year here. Check it out here.

PRIVATIZATION WATCH-

Gov’t gears up to sell off or repurpose state-owned properties: President Abdel Fattah El Sisi issued a decree that will see the government transfer its ownership of a set of ministerial headquarters — including Cairo landmarks like the Foreign Ministry's Nile-side HQ — to the Sovereign Fund of Egypt (SFE), according to a decision published in the Official Gazette. The ministries listed under the decision will continue operating in their current buildings until they are moved to the new capital or another location, the decision read.

REAL ESTATE-

Updates on the real-estate-for-FX scheme: Amid talk that the government is working to clone the expat car import initiative for real estate, real estate players and gov’t officials met to discuss the fine print. The latest proposals for the fresh initiative could see the government refund 80% of the property price to the buyers in EGP over an 8-10 year period.

WHAT’S HAPPENING NEXT WEEK-

Here are the key news triggers on which to keep your eyes on next week.

  • PMI: S&P Global will publish Egypt’s PMI figures for January on Monday.
  • Inflation: Capmas and the CBE will publish the latest inflation data on Saturday, 10 February.
  • Foreign reserves: The central bank should release January’s foreign reserves figures at some point next week.

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

AROUND THE WORLD IN SEVEN DAYS-

#1-Fed leaves rates unchanged: The US Federal Reserve left interest rates unchanged for the fourth consecutive meeting on Wednesday, in line with expectations. Interest rates will stay at a 22-year high of 5.25%-5.50% following an aggressive monetary tightening cycle, which has pushed rates to their highest level since 2001.

March cuts seem unlikely: Despite the Fed officials saying that “the risks to achieving their employment and inflation goals are moving into better balance,” Fed chair Jerome Powell made it clear that rate cuts are further down the line than many had hoped. “Based on the meeting today, I would tell you that I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting,” he said on Wednesday.

#2-White House accuses Iran-backed fighters of being behind drone strike that killed three US soldiers in Jordan: After US President Joe Biden vowed “we shall respond,” Iran’s UN Ambassador Amir Saeid Iravani threatened a “decisive response” against any US retaliation on its “territory, or its interests or citizens abroad,” according to Iranian state media.

But despite the tough talk from the US and Iran, the two say they don’t want a war. Islamic Revolutionary Guard head Major General Hossein Salami said in a speech on Wednesday that “we are not looking for war, but we are not afraid of it either,” in a message that was repeated by the country’s outward-facing state news agency. Days earlier, White House National Security Council spokesman John Kirby also told reporters in a White House press briefing that “we are not looking for a war with Iran … we are not looking to escalate here” (watch, runtime; 1:05:01)

AND IN TECH NEWS: Elon Musk’s Neuralink implanted a brain chip into its first patient yesterday as part of the startup’s plan to enable mortals like us — with a special focus on those suffering from paralysis — to control machines with our thoughts. (The Guardian)

☀️ THE WEATHER THIS WEEKEND- Another gloomy day lies ahead with a high of 17°C before dropping down to a low of 9°C, but expect to catch a break with Saturday’s clear and sunny skies, a high of 18°C, and a low of 9°C, according to our favorite weather app.

HAPPENING THIS WEEKEND-

BOOKS-

The Cairo International Book Fair is ongoing until Tuesday, 6 February at the EgyptInternational Exhibitions Center in the Fifth Settlement, New Cairo.The doors are open everyday from 10am to 8pm, except Thursday and Friday, when their doors close at 9pm.

PHOTOGRAPHY-

The Fujifilm festival started yesterday, and runs until this Sunday, 4 February. You’ll have four full days of activities, meetups, and talks, as well as a photography contest and an exhibition that you can partake in. You can bring your camera along to get a gratuitous CMOS and lens cleaning and check out the GFX 100 ii Studio on-site. Fujifilm X-Photographers and creators will be there too — don’t miss out on the networking potential. Check out their Facebook page for more information.

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