The government is raising export rebates by an average of 35% and picking up as much as half the freight bill to new markets

Good morning, lovely people, and welcome back from the weekend. If October felt rough, you weren’t imagining it: the EGP slid past 56, the EGX halted trading for the first time since 2021, and foreign money headed for the door. In today’s issue, we ask analysts why the boards of five companies spent the recovery week buying their own stock, and why the freefloat is the question to watch.

Goldman Sachs now puts the EGP more than 30% below its fair value after October’s slide past 56, and sees it at 50/USD a year out. It’s keeping its buy call and telling allocators how to hedge — we break down the numbers, the USD 10 bn foreign exit behind them, and the caveats below.

MEANWHILE- The government is putting more money behind exports. A revamped rebate program the Cabinet approved last Thursday lifts support by an average of 35% from this month’s shipments and covers half of sea and land costs to Africa, Latin America, Southeast Asia, and beyond, plus a quarter of air freight to Europe. We walk through who’s covered, who’s excluded, and why the government is leaning on exports now.

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Freight rebate special

Exporters will get an average of 35% more in government support under a revamped export rebate program the Cabinet approved on Thursday, 5 November, according to a statement. The new rates already apply to shipments from the start of this month. The increase varies by sector and excludes freezone exporters. The program covers textiles, agricultural and food products, engineering, medical goods and pharma, furniture, leather, chemicals and packaging, building materials, and handicrafts, Investment and Foreign Trade Minister Mohamed Farid says in the statement.

Freight gets its own support line, with the program covering 50% of sea and land freight costs to Africa, Latin America, Australia, Southeast Asia, and Russia, the statement says. It will also cover 25% of air freight to Europe and 50% to the UK, both for agricultural exports. On top of that, it will pay 25% of domestic transport costs, 25% of cargo ins. policies, and 25% of the invoice for shipments on express vessels.

The government is also keeping the extra incentives for target markets, and has added the US and 11 Southeast Asian countries to the list. Exporters will also have to submit complete files before they’re accepted, a rule change meant to stop incomplete files piling up and holding up payouts.

As for timing, the program rolls out in two phases. The first runs to the end of 2026 and aims to lift exports quickly and bring new companies in. The second, starting from July 2027, will tackle the longer-term challenges exporters face.

IN CONTEXT- The FY 2026/27 budget earmarks EGP 48 bn for export support, up from the EGP 28 bn actually disbursed last fiscal year. Meanwhile, the Finance Ministry is still working through arrears on shipments made before July 2024.

Why it matters: Exports are among the steadiest FX sources that Egypt can grow through its own production — foreign investors net sold some USD 2.07 bn of local debt in October, pushing the greenback to a record EGP 56.35. The EGP has since clawed back some of that ground, with the USD closing on Thursday at EGP 53.97, some 4.2% below its peak by our math, as the Central Bank of Egypt’s rate hike drew foreign buyers back to local debt.

Non-oil exports grew 7.8% to USD 37.3 bn in FY 2025/26, well behind a 16.9% jump in non-oil imports, which pushed the trade deficit up 27.1% to USD 64.8 bn. The balance of payments still ended the year in surplus, but only with help from remittances and a one-off USD 3.5 bn Alam El Roum tranche. A wider export base would reduce that reliance on hot money and one-off transactions, leaving the economy better placed to absorb external shocks.

Tightening the belt

The Cabinet approved a draft decree on Thursday ordering three months of public spending rationalization across all state budget entities and public economic authorities, extendable if needed, according to a statement. Events in the Middle East require the state to reorder its spending priorities to contain the crisis’s fallout, the Cabinet says.

What gets cut: Government entities must cut electricity and lighting use by 20% compared with the same period in FY 2025/26, and fuel for government vehicles by at least 30%. At least 20% of the remaining goods-and-services allocations are frozen, while fuel-intensive national projects will be postponed or slowed for at least three months. Those projects also need plans to cut their own electricity use by 20% and fuel by 30%.

Projects newly added to this year’s budget are deferred, with no new contracts on them until 30 June 2027 unless they were already signed. No new projects can start this fiscal year, with available capex going to works that are close to completion. Government passenger car purchases are also off until the end of June 2027.

Some spending is off the table entirely: Advertising, publicity, parties, receptions, public relations, cultural activities abroad, sports equipment, and prizes and medals have been axed. So are travel allowances abroad and exhibitions and conferences at home or abroad. Taking part in conferences needs prior approval, while overseas travel is limited to cases of extreme necessity with the prime minister’s sign-off, unless the host covers the bill.

A locked door on state FX: Any spending with a foreign currency component now needs the Finance Ministry’s approval, coordinated with the Central Bank of Egypt (CBE). Entities are also barred from contracting for any work that could later require FX or external borrowing.

What’s spared: The rules don’t apply to the Health Ministry and other healthcare providers, national security, loan interest and repayments, social solidarity pensions, Takaful and Karama, or petroleum and gas supply. Food subsidies are also exempt, though they come with a commitment to import less wheat as local supply rises. On the investment side, presidential and prime ministerial directives, Haya Karima, health, pre-university education, the interior, drinking water, and wastewater are all exempt. So are projects tied to national, water, food, and cyber and energy security.

We’ve been here before: This is the state’s second spending squeeze this year. The prime minister issued Decree 932 of 2026 in late March, weeks after the war on Iran began and Hormuz closed, setting rationalization rules through the end of FY 2025/26. The playbook goes back to January 2023, when Prime Minister Mostafa Madbouly ordered state bodies to postpone projects requiring FX. That order also required Finance Ministry sign-off, coordinated with the CBE, for any FX spending, as Egypt worked through the FX crunch that followed Russia’s invasion of Ukraine.

Bypassing the USD

Egypt and India have carried out the first successful pilot transfer settling trade in their own currencies, Indian Ambassador to Egypt Suresh K. Reddy told Al Arabiya. The pilot is designed to test technical payment rails and lower FX conversion friction ahead of scaling corporate trade settlements in EGP and INR.

REMEMBER- Egypt had set a target of increasing annual bilateral trade with India from USD 6.5 bn in FY 2025/26 to USD 12 bn within five years. The trade runway for India-Egypt is sectoral and monetizable. Egypt’s Ambassador to India Kamel Galal had pointed out key avenues, including potentially adding USD 800 mn in trade volumes from the joint manufacturing of fashion goods in the Suez Canal Economic Zone, as well as rising solar panel imports from India, and targeting the Indian IT sector to contribute to Egypt’s digital transformation.

Not the first swap trial: Egypt and the UAE also renewed their AED-EGP currency swap agreement for another five years last month, keeping an AED 5 bn facility in place to support bilateral trade and financial settlements. The facility is intended to support greater use of the two countries’ currencies in cross-border transactions. As the country continues to look for ways to reduce the role of the USD as an intermediary in its trade corridors, Egypt is also planning to link InstaPay to the Pan-African Payment and Settlement System. The link-up would let Egyptian traders settle with African counterparts in local currencies rather than rely on USD, cutting the cost and time it currently takes to route a payment through a correspondent bank.

Data point

USD 57.5 bn — that’s where the country’s net international reserves stood at the end of October 2026, inching up by USD 151.6 mn from USD 57.35 bn in September, according to provisional data from the Central Bank of Egypt.

PSA-

WEATHER- Cairo is settling into a milder autumn groove today, with a high of 24°C, and a low of 16°C, according to our favorite weather app.

It’s much the same in Alexandria too, with a high of 23°C and a low of 17°C.

The big story abroad

Tensions are flaring even before the new US Congress convenes. US President Donald Trump has instructed the Justice Department to open an investigation into the Democrats, who have promised to scrutinize his administration and Republican donors when the Democratic Party assumes control of the House and Senate in January. Fresh off a sweeping midterm victory, Democrats have vowed to examine evidence related to how the Trump administration handled the review of the Epstein files that lawmakers had ordered be made public. The Democrats have also pledged to look into Trump’s tariffs, immigration policies, and stock trading.

Nvidia CEO suspected of involvement with Chinese spy: Washington believes Nvidia CEO Jensen Huang was romantically involved with alleged Chinese spy Alice Huang, an executive at Megaspeed, a Singapore-based customer under US scrutiny for allegedly smuggling Nvidia chips into China, the Financial Times reports, citing people familiar with the matter. US intelligence believes China’s Ministry of State Security recruited Alice. A memo on the relationship reached senior officials shortly before Trump’s Beijing summit with his Chinese counterpart Xi Jinping. Nvidia declined to comment. The company had launched an internal probe earlier into the smuggling claims and said it found no evidence of wrongdoing.

Back to the table: The US, Russia, and Ukraine will meet in Abu Dhabi this week for their first talks on ending the war since February. Moscow will send senior diplomats as well as military intelligence and army officials. Deputy Foreign Minister Sergei Ryabkov will also join for the first time. Russia launched missile and drone strikes on energy facilities around Kyiv over the weekend, which is putting pressure on the capital’s electricity and heating as temperatures drop near freezing.