A message of reassurance from Madbouly: The hot money outflows last week, triggered by the global markets meltdown, represented no more than 7-8% of foreign investors’ holdings of our debt instruments, Prime Minister Moustafa Madbouly told reporters (watch, runtime: 56:23) on Thursday.

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ICYMI- Fears of a US recession after the publishing of “alarming” US economic data threw equity markets into a tailspin last Monday, triggering a global sell-off that pushed Wall Street to its worst day in nearly two years and erasing USD 6.4 tn from global stock markets. The EGP was changing hands at an average of 49.2 to the greenback on Monday— its lowest level since March — while the benchmark EGX30 dropped 2.3% to close at 27.8k, before recovering.

What that meant for us: Foreign investors sold some USD 600 mn worth of local debt instruments during the days leading up to last Monday as they poured their capital into safe-haven assets.

How was it handled? Investors withdrew their funds at the higher greenback price and were paid from market liquidity rather than the central bank’s FX reserves, according to Madbouly. He added that the outflows’ impact on the EGP / USD exchange rate was manageable and mirrored those of other emerging market currencies.

Remember: Net foreign reserves edged up by USD 105 mn in July to hit a fresh high of USD 46.5 bn, surpassing the USD 46.4 bn recorded in June.

Geopolitical tension at play: Madbouly highlighted that the ongoing regional geopolitical turmoil, which could potentially worsen amid escalating tension between Israel and Iran, is compounding uncertainty in global markets, with Egypt no exception to these pressures.

The story was also picked up by Reuters.

ALSO FROM THE PRESSER- Subsidized industrial loans will live on: Madbouly said that he had asked the Finance Ministry and the central bank to renew the subsidized loan program that targets industrial activity.

Refresher: The PM announced in March that he had approved a new EGP 120 bn program of subsidized loans for manufacturers in freezones as well as agriculture and renewable energy companies. The program offers financing at an interest rate of 15%.

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