Income tax changes are back on the legislative agenda

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What We're Tracking Today

Egypt’s finance minister to face MPs on tax hikes

Good morning ladies and gents: Tax is well and truly back on the agenda as we start the beginning of a new week, with MPs getting ready to discuss not one but two bills that will both cut and raise (but mostly raise) various taxes and duties as the government looks to bolster revenues heading into the new fiscal year.

Also: We also bring news of more potential investment from China, a more specific timeframe for our maiden panda bond issuance, and a look at how the FX crunch could be impacting the nation’s food security.

But first things first…

It looks like we have another dusty day ahead: Greater Cairo is looking at more dusty winds throughout the day with a 30% chance of rain, according to the Egyptian Meteorological Authority. The mercury will rise to 34°C during the daytime before dipping to lows of 21°C.

Bad weather forces closure of two ports: Authorities yesterday shut down the Red Sea ports of Suez and Zeitiyat due to strong winds and high waves, the Red Sea Ports Authority said in a statement.

HAPPENING TODAY-

The House is back in session: MPs will question Finance Minister Mohamed Maait over the ministry’s proposed tax amendments, including the package of tax and development fee hikes and changes to income tax given approval by the House Planning and Budgeting Committee last week. We have more details on the income tax changes in this morning’s news well, below.

At the committees:

The Budget Committee will continue discussions on the state budget for the fiscal year 2023-2024;
The Industrial Committee will hold three meetings to discuss the problems facing the spinning and weaving industry, the dramatic rise in prices of building materials (particularly cement and reinforced steel), and how to boost private investments in the building materials sector;
The Agriculture Committee will hold discussions on this season’s wheat harvest;
The Environment and Energy Committee will discuss recommendations from the COP27 summit and the government’s green hydrogen plans;
The Youth Committee will review Egypt’s preparations for next year’s Summer Olympics.

Tomorrow at the House: MPs will discuss and vote on two foreign agreements on maritime transport, and a proposal for Egypt to join the 2006 Maritime Labor Convention.

The Builders of Egypt Forum takes place at the Nile Ritz-Carlton: The event will bring together more than 300 business leaders in the contracting and real estate sectors, financial institutions, and local and regional business organizations.

We’ll know who’s going to be leading Turkey for the next five years: TurkishPresident Recep Tayyip Erdogan is in pole position to win a third term in office as voters head to the polls today. The incumbent only narrowly missed out on claiming the presidency in the first round of voting earlier this month, and now with the backing of the third-placed candidate looks to be in a strong position to win the head-to-head match-up with challenger Kemal Kilicdaroglu.

NOT HAPPENING TODAY- The National Dialogue, which is taking a week off. The dialogue will resume sessions on Sunday, 4 June, according to a statement. The dialogue has been hosting four sessions every Sunday, Tuesday, and Thursday since it kicked off two weeks ago.

HAPPENING THIS WEEK-

IEF-IGU Ministerial Gas Forum: The International Energy Forum and the International Gas Union will hold its Ministerial Gas Forum on Monday, 29 May.

Deadline for 1Q financials: Listed companies have until Tuesday, 30 May, to report and publish their 1Q results.

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

MORNING MUST READ-

“Achieving genuine economic reform has become a matter of utmost priority”: That’s according to former deputy prime minister Ziad Bahaa Eldin, who calls on the government to get more ambitious with its reform agenda in an op-ed in the Financial Times on Thursday.

Looking to the future: Rather than talking about covid-19 and the war in Ukraine, Bahaa El Din urges policymakers to reassess some of the policies that have contributed to the crisis and focus on building a more sustainable economy driven by private sector-led exports.

More must be done: Welcoming the package of business-friendly reforms announced earlier this month, the former deputy PM calls on officials to go further. “For the message to be truly convincing, and to attract the attention of a skeptical community of international and local investors, a comprehensive economic reform programme must be adopted, declared and followed through,” he writes. “Only then will success stories become the norm and will Egypt’s abundant opportunities and potentials be realized.”

THE BIG STORY ABROAD-

Crisis averted: US President Joe Biden and House Speaker Kevin McCarthy last night reached an “agreement in principle” to raise the debt ceiling and avert a federal debt default. “We still have more work to do tonight to finish the writing of it,” the House speaker told reporters, adding that he expects the bill to be written today and a vote to take place on Wednesday. (Associated Press | Reuters | Bloomberg | Financial Times | New York Times | Washington Post | Wall Street Journal | CNBC)

WATCH THESE SPACES-

#1- We still don’t know if household electricity prices are rising come July:A final decision hasn’t yet been made regarding the potential increase in household electricity prices in July, Deputy Electricity Minister Ali Abdelfattah told MPs on Thursday. The current freeze on prices is due to expire at the beginning of the coming fiscal year on 1 July. Residential electricity bills had been set to rise by as much as 21% last year under government plans to restructure pricing and phase out electricity subsidies by 2025.

#2- We might have a competitor regional natural gas hub: Cyprus wants to accelerate building a pipeline to Israel’s natural gas fields under a plan that could see it become a key energy supplier to the rest of Europe, Bloomberg reported Friday. Having originally planned to lay a pipeline connecting the Eastern Mediterranean to Greece and Italy, Cyprus now plans to acquire its own LNG facilities where it can liquefy imported Israeli gas and export it to Europe, its energy minister told the business news outlet.

Why this matters: We’re currently the only country in the EastMed able to export LNG and in recent years have been positioning ourselves as the region’s key energy hub.

What’s next: Cyprus is holding a two-day workshop this week to discuss its plans for the project with potential stakeholders, includingTotalEnergies, Exxon Mobil, Eni and Shell — the oil and gas firms already working on projects in Cyprus.

#3- A USD 100 bn plan to help developing countries secure green finance is on the table: An intergovernmental summit in Paris next month is set to discuss a plan that would see the IMF and other multilateral development banks (MDBs) spend some USD 100 bn annually on currency guarantees to help developing countries secure climate finance, Reutersreports. The proposal is part of the Bridgetown Initiative — a plan to reform how rich nations extend development finance to developing countries — and will be discussed at a summit in Paris in June.

The mechanism: Under the plan, MDBs would compensate investors who purchase sustainability-linked bonds if the country involved devalues its currency. This would lower the risk premia of these bonds, enabling issuing countries to cut their interest rates. These guarantees would cover only green transition investments, including green bonds that finance environmentally friendly projects and blue bonds, which are ocean-focused.

FACT CHECK- The Cairo Court of Cassation has denied permitting real estate developers to increase their prices and push their deadlines, Akhbar El Youm reported. This was in response to local media reporting yesterday that the court had ruled in favor of an undisclosed real estate company increasing its prices and extending the implementation deadline of its project.

What happened: The decision was taken by a court in Alexandria for a specific case and is not a general rule issued by the Court of Cassation, Tarek Shoukry, head of the real estate division of the Federation of Egyptian Chambers of Commerce, told El Hekaya’s Amr Adib last night (watch, runtime: 13:02). The developer was suffering losses because of the 2016 devaluation and because of that the court allowed it to increase its prices and extend its delivery deadline by two years, he said.

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Egypt house committee approves income tax changes

Another raft of tax changes are back on the legislative agenda: Tax changes that would reduce income tax for lower earners and raise tax for those on the higher incomes received approval from the House Planning and Budget Committee on Thursday. Draft amendments to the income tax law would raise the personal income tax exemption threshold to EGP 36k from EGP 24k while introducing a new 27.5% higher rate of tax for people earning more than EGP 1 mn a year.

That’s a higher band than we’d been expecting: We’d previously been told by a source at the Finance Ministry that the new top tax band would affect earnings above EGP 800k. The current top rate of tax is currently 25% and is applied on annual incomes over EGP 400k.

REFRESHER- President Abdel Fattah El Sisi directed the government to raise the income tax exemption threshold back in March, with our FinMin source at the time telling us the new top tax rate would be brought in in tandem. See our initial story for more detail on how income tax works and how the changes are expected to impact each tax band.

Top earners will cover some of the tax breaks for lower earners: Raising the income tax threshold will cost the state treasury some EGP 10 bn — EGP 4 bn of which will be offset by the revenues generated from the new top rate, Deputy Finance Minister Ramy Youssef told MPs.

THERE’S MORE-

The amendments include measures to simplify tax procedures and combat tax evasion, Finance Minister Mohamed Maait said in a statement Friday:

#1- All small businesses considered SMEs for tax purposes: Any business with annual revenues of less than EGP 10 mn will be eligible for the preferential, flat-rate tax treatment that was brought in for SMEs under a 2020 law.

#2- Incentives for individual e-invoicers: Individuals who are obliged to file under the new e-invoicing system will get an incentive worth 5% of their annual tax bill. Remember: Self-employed people only need to register for e-invoicing if they work with entities that are required to file e-invoices — as opposed to with end consumers — after blowback from professionals including doctors, lawyers, and pharmacists.

#3- Whistleblowers’ reward: Citizens who help the ministry detect cases of tax evasion will receive up to 10% of the penalty paid by the culprits.

This was the second package of tax changes to be approved by the committee last week:Legislation that would make a number of changes to existing taxes and duties — including introducing a new entertainment tax, imposing fees on duty-free products, raising duties on imported luxury goods, and doubling departure the fee charged on flight tickets — was approved by the committee on Wednesday.

Departure fee hike only applies to locals: The proposal to double the existing EGP 50 departure fee only applies to locals and not foreign tourists, Maait clarified in the statement.

What’s next? The amendments will be discussed and voted on by the House General Assembly in an upcoming session. MPs are reconvening today.

Chinese firms to build energy, chemicals, textiles plants in Egypt’s SCZone

More Chinese investment in the SCZone is in the cards: The Suez Canal Economic Zone (SCZone) has signed agreements with a number of Chinese companies that could see more than USD 700 mn invested in projects in China’s TEDA industrial zone in Ain Sokhna, the zone said over the weekend. The agreements were signed in Hangzhou city, the latest stop on the zone’s ongoing roadshow in China and Hong Kong. No details were given on the timeline to implement the projects.

#1- Hidier Power Group will build a USD 265 mn power plant in the SCZone. The company will spend USD 38 mn to build a 200MW substation in the initial phase of the project, the zone said in a statement Friday.

Hidier will also construct a USD 100 mn petcoke products factory. The first phase will cost some USD 30 mn and produce 50k tons of products annually.

#2- Shandong Tianyi will build a USD 110 mn bromine factory with a production capacity of 140k tons a year. The facility is expected to generate USD 600 mn in revenues per year and create 700 jobs. The company will also launch a USD 200 mn sodium hydroxide project, producing raw salt, sodium bicarbonate, chlorine, and hydrogen that wasn’t included in the SCZone’s overall tally of fresh investments. That project is expected to generate annual turnover of USD 160 mn and create 420 jobs, the statement reads.

#3- Clothing company Shanghai Shengda signed a letter of intent to set up a USD 20 mn factory in the zone, according to a separate statement.

#4- A subsidiary of Golden Spring Group will set up a USD 12 mn textiles project.

AND- Energy firm Chint Global and the Zhejiang trade zone will work with the TEDA industrial zone to offer training.

Also on the table: Textile and green plastic producer Zhink expressed interest in being present in the SCZone, while Asdet said it wants to establish a 40k-sqm readymade garment factory, according to another statement. Chinese VC Estar Capital is interested in investing in our green hydrogen-feeding industries and energy sector. SCZone officials also met representatives from the home appliances giant Midea Group, who said that their USD 25 mn factorywill kick off operations next month, with the aim of exporting products in July.

The China roadshow so far: A Chinese consortium earlier last week offered to establish a USD 300 mn ironworks in the SCZone while Energy China said it would sign a framework agreement for its proposed green hydrogen within two months. SCZone Walid Gamal El Din also met with a number of other Chinese business leaders and investors about investing in the zone. China is the latest stop in a global tour which has this year seen SCZone representatives travel to Japan, the Netherlands, and Vietnam. It plans to head to India next month.

Western firms are also eyeing the SCZone:Volvo last week expressed interest in upping its investments in the zone during the Egyptian-Swedish Business Forum in Stockholm, the SCZone said in a statement.

Egypt to hold maiden panda bond issuance in 3Q 2023

Panda bond issuance coming next quarter? The Finance Ministry expects to go ahead with its maiden USD 500 mn CNY-denominated bond issuance in 3Q 2023, Finance Minister Mohamed Maait told Enterprise. The Finance Ministry is currently finalizing the procedures to bring the bonds to market.

Why the delay? The issuance was initially slated for the first quarter of 2023 but “current international market conditions made it difficult to issue new bonds during the current fiscal year,” Maait told Al Mal. The panda bond issuance was first announced in 2019 but was put on hold due to the pandemic.

Where is the money going? The proceeds are set to be used for sustainable development projects including green transport, renewable energy and energy efficiency, water treatment, MSME financing, and healthcare

REMEMBER- The African Development Bank (AfDB) has agreed to provide guaranteeUSD 345 mn of the issuance.

Egypt defers wheat payments amid FX crunch: supply minister, traders

State grains buyer the General Authority for Supply Commodities (GASC) has deferred opening letters of credit (L/Cs) for wheat payments amid the FX crunch, Supply Minister Ali El Moselhy told Reuterslast week. “We don't want to add pressure on the central bank. Hence we are phasing with the suppliers and so we have to thank the suppliers very, very, very much for their understanding,” El Moselhy said.

How it usually works: State-owned banks, on behalf of GASC, open 180-day L/Cs, where the supplier receives payment when they make the shipment. The state then has 180 days to pay the bank.

This hasn’t been the case: Banks are currently lagging behind and need to open L/Cs for as many as 11 wheat cargoes, traders told Reuters. “It was never this late. But the country was never in this situation before. This is brand new for Egypt,” one trader said.

Shipments are carrying on as usual: Despite the payment delays affecting shipments dating back to December, suppliers are continuing to participate in GASC tenders and making their shipments on time. “It's not normal but they know it's GASC and it's the government … They don't doubt they will be paid,” one unpaid supplier said.

But not for long: Delayed payments will eventually catch up with the GASC. “If we have two L/Cs unopened, we don't offer the third one … There was a lot of pressure to unload even though there was no L/C, and it was a huge amount so I had to go to our CEO and get approval,” another trader told the newswire.

We already have a lot of aid: The World Bank last year extended a USD 500 mn loan to improve Egypt’s food security, part of which is helping to pay for wheat imports. The International Islamic Trade Finance also doubled its financing agreement with the country to USD 6 bn to help the state meet its payments for imported wheat and oil.

The FX crunch isn’t just impacting wheat: The amount of money owed to international oil and gas companies has more than tripled to USD 3 bn since mid-2020 due to the shortage.

Ashmawy denies the news: “Egypt has never been late honoring financial obligations, for all external obligations, not just wheat purchases,” Assistant Supply Minister Ibrahim Ashmawy told El Hekakya’s Amr Adib last night (watch, runtime: 10:22). “We have more than one way to secure the needed funding for wheat purchases,” he said, adding that it’s possible that GASC has negotiated more flexible payment plans with one of its suppliers.

Our wheat reserves are looking much healthier: The government currently has enough wheat in reserve to cover six months, Ashmawy said. This is up from just 2.3 months at the beginning of April before the start of the local harvest. Egypt has imported some 2.9 mn tons this season, up 20% from last year and the GASC has auctioned off some 750k tons of imported wheat through the commodities exchange, Ashmawy said

EFG Hermes Holding is now EFG Holding

EFG Hermes Holding has officially rebranded to EFG Holding after the company’s shareholders signed off on the change during last week’s annual general meeting, according to a statement (pdf). The rebrand “reflects EFG Holding’s growth from one of Egypt’s first pure-play, independent investment banks to what is now a financial powerhouse with the ability to serve people of all income levels and companies of all sizes,” the statement read.

There will be no changes to the company’s management structure or day-to-day operations on the back of the rebrand, the statement notes, adding that its three verticals will continue to work in tandem with one another. They are:

Investment banking firm EFG Hermes, which operates across frontier and emerging markets;
NBFI platform EFG Finance, which includes leasing and factoring company EFG Corp-Solutions, microfinance provider Tanmeyah, and mortgage finance firm Bedaya, among others. BNPL player valU is a “sub-brand” that is independently led;
Commercial lender aiBank, in which EFG Holding acquired a 51% stake in 2021.

Focusing on growth: Now operating across 12 markets with some 7.1k employees, EFG Holding has adopted “Realize More” as its new slogan. “It is the optimal time to transform our brand to capture the breadth and magnitude of our product and service universe as well as reflect the resilience of our growth strategy,” said CEO Karim Awad.

Fewer clashes in Sudan following truce but humanitarian crisis continues

Low-level fighting continues in Khartoum despite ceasefire: Sporadic clashes between the Sudanese army and the Rapid Support Forces continued in Khartoum yesterday though the week-long ceasefire that came into force on Monday has reduced fighting across the city, witnesses told Reuters. The truce, brokered by Saudi and US mediators during peace talks in Jeddah, was supposed to facilitate humanitarian relief into the country but mns of people in the capital across the country remain in need of aid.

RSF blames the army: The RSF, in a statement, said that the army has failed to respect the ceasefire agreement, calling on the international community to denounce the army’s unlawful actions.

What’s next: The truce will expire on Monday evening without an agreement to extend it. The RSF said last night that it is ready to discuss extending the arrangement.

The army is trying to bolster its forces: The army called on reservists and retired soldiers to re-join ahead of a potential resumption of full-scale fighting after the ceasefire expires, according to Reuters.

Sisi joins African leaders calling for peace in Sudan: President Abdel Fattah El Sisi attended a virtual meeting of the African Union’s Peace and Security Council centered on the war in Sudan. El Sisi reiterated the need for the Sudanese factions to reach a ceasefire agreement and the need to preserve the sovereignty of the state of Sudan. He also said that Egypt will continue to work with the African Union and all relief organizations to support humanitarian efforts.

GB Corp profit, revenues hit amid Egypt automotive slowdown

GB Corp saw a decline in net income and revenues in 1Q 2023 as it continued to feel the impact of the slowdown in the automotive industry, the company said in its latest earnings release (pdf). Profits fell 53% y-o-y to EGP 107.7 mn while revenues were down almost 40% to EGP 4.7 bn in the January-March quarter on the back of what the company described as “challenging market conditions.”

Tough times in the auto sector: GB Corp’s automotive arm GB Auto saw revenues fall 37% y-o-y to record EGP 3.9 bn, “hindered by the devaluation of the EGP, restrictions on imports, and a slowdown in opening L/Cs, which limited inventory supply across the portfolio.” GB Auto posted a net loss after non-controlling interest of EGP 80.5 mn for the quarter, compared with net earnings of EGP 107.9 mn in the same quarter a year before. The company put the negative income down to an EGP 264 mn forex loss, “the majority of which is recoverable upon the sale of the inventory.”

REMEMBER- Sales across the auto sector remained depressed in the first three months of the year after falling more than a third in 2022. The sector is yet to recover from the impact of capital controls brought in last year that made it almost impossible for distributors to import cars and components, and forced a number of global car manufacturers to suspend sales to Egypt.

GB Corp’s NBFS arm fared better: The company’s non-banking financial services subsidiaryGB Capital reported a 21% increase in revenues to EGP 1.0 bn in 1Q 2023. Net income was up 55% y-o-y to EGP 189.4 mn.

What they said: “Consolidated revenue and net profit fell year-on-year as we grappled with supply shortages across all our GB Auto lines of business. However, by having a diversified revenue stream we demonstrated the ability to identify and capitalize on growth opportunities in Iraq, which currently represents 22.3% of our revenue,” CEO Nader Ghabbour said. “We are confident that once inventory levels rebound, strong demand for our portfolio will lead to a rapid turnaround in results. On the other hand, GB Capital's performance has been steadily growing and achieving operational milestones.”

Tax topped the agenda on Egypt’s talk shows

It was quieter than usual on the airwaves last night with Kelma Akhira’s Lamees El Hadidi taking the night off. The rest of the nation’s talking heads brought us coverage of the proposed tax increases which were approved by the House Planning and Budget Committee last week and will go through to the General Assembly today.

Maait defends tax hikes: Finance Minister Mohamed Maait joined El Hekaya’s Amr Adib (watch, runtime: 36:08) on Friday to back up the package of proposed tax hikes that proved controversial (“The reaction hasn’t been very positive,” Adib told the minister). “In order not to increase our debt levels we have to increase the country’s resources without affecting basic commodities,” Maait said, adding that these taxes won’t affect the everyday lives of the average citizen. House Budget Committee chairman Fakhry El Feky joined Masa’a DMC (watch, runtime: 13:32) to walk people through the new batch of proposed tax hikes.

Moussa calls on MPs to reconsider: Ala Mas’ouleety’s Ahmed Mousa (watch, runtime: 3:07 | 4:34) called on the House to reconsider the move and find other revenue streams ahead of its discussion today. “This move is very dangerous. Enough with the price increases. Enough additional pressure on citizens,” Moussa said. Inflation and price hikes have affected everyone in the country, the poor and the rich, he added.

Mummification workshops unearthed at Egypt’s Saqqara

Our latest archeological discovery is driving headlines in the foreign press this morning: An Egyptian archeological mission uncovered human and animal mummification workshops in Saqqara. (AP | Reuters | AFP| The National | Xinhua)

Also making headlines:

Egyptian tennis star Mayar Sherif takes to the French Open court today:Sherif talked about her journey to the top of the sport ahead of her first round match. (Sky Sports | BBC)
Freed from prison, female debtors continue to face hardship: Reuters sheds light on the stigma female debtors face and their struggles after serving prison sentences.

VAT break on pharma imports to prevent shortage. PLUS: More AfDB money for water, Tatweer Misr eyes KSA,

TAXATION-

A tax break on imported pharma materials: A number of imported raw materials used in the pharma industry will be temporarily exempt from VAT under a decision issued by the Customs Authority on Thursday.The decision follows recent reports that the pharma industry’s reserves of raw materials are enough to only last two months, sparking fears that the ongoing import blockages caused by the FX crunch could result in shortages of pharma products.

REMEMBER- The Madbouly government last weekrolled out measures to prevent any shortages from occurring — allocating USD 100 mn a month to support pharma factories, USD 150 mn a month to support hospitals, and working with the central bank to release medical supplies and raw materials still stuck at ports.

DEVELOPMENT FINANCE-

The African Development Bank (AfDB) is lending EUR 110 mn for the third phase of the Gabal El Asfar water treatment plant,International Cooperation Minister Rania Al Mashat said at the bank’s annual meetings in Sharm El Sheikh last week. The UK government will provide a credit guarantee for part of the EUR 80 mn of the financing that is coming direct from the bank. The other EUR 30 mn is coming out of the AfDB’s China-backed Africa Growing Together Fund, Al Mashat said.

REMEMBER- The AfDB has mobilized USD 2.2 bn to improve Egypt’s water security under the government’s Nexus for Water, Food and Energy (NWFE) program and previously lent USD 57.5 mn for the second phase of the Gabal El Asfar plant,

And we want even more: Central Bank of Egypt Governor Hassan Abdalla called on the AfDB to increase concessional loans to member states, Ahram Online reported. His comments come shortly after Finance Minister Mohamed Maait said that Egypt is looking to secure more long-term concessional loans from regional and international development banks to fund public services.

REAL ESTATE-

Tatweer Misr to enter KSA: Tatweer Misr is partnering with a firm in Saudi Arabia and plans to launch its first project in the kingdom soon, company CEO Ahmed Shalaby told Asharq Business in an interview on the sidelines of the Nile Property Expo in Riyadh (watch, runtime: 4:33). He said details of the partnership, which would mark the firm’s first foray outside of Egypt, would be released this week.

FINANCIAL SERVICES-

Amanleek gets the greenlight from the FRA: Digital ins. brokerage Amanleek has received the Financial Regulatory Authority’s approval to operate in the local market, it said in astatement(pdf).

STARTUPS-

Homegrown smart device maker CardoO has launched its first smartwatch after securingUSD 660k in seed funding in October, according to a company press release (pdf). The company last year said it was working to launch two or three products and move 100% of its manufacturing operations to the local market from China by the end of 2023.

Adnoc L&S IPO raises USD 769 mn following huge investor demand

Adnoc L&S sees huge investor demand:Investors submitted bids worth USD 125 bn for Adnoc Logistics & Services’ USD 769 mn IPO, implying a 163x oversubscription level, the company said in a statement (pdf) Thursday after it closed the book. The sale valued the company at USD 4.05 bn after it sold 1.41 bn shares — equivalent to a 19% stake — at the top end of the AED 1.99-2.01 price range. The company was originally intending to sell 1.1 bn shares but increase the size of the IPO by 26% after the order book was oversubscribed within minutes of opening.

What’s next: Adnoc L&S shares are expected to debut on the Abu Dhabi stock exchange on 1 June.

This is the second Adnoc IPO this year: Adnoc Gas raised USD 2.5 bn in its Abu Dhabi IPO in March.

Strong US data signals further policy tightening: The Federal Reserve could face pressure to continue to raise interest rates when it meets next month on the back of unexpectedly strong US data out last week. Consumer spending — a key driver of inflation — rose 0.8% in April from 0.1% in February and March, while the central bank’s preferred measure of inflation — the personal-consumption expenditures price index — accelerated to 4.4% y-o-y from 4.2% in March. Fed funds futures jumped on the news and are now pricing in a 70% chance that the Fed will raise rates on 14 June.

ALSO WORTH NOTING-

Saudi wealth fund sets up Iraq investment arm: The Public Investment Fund has set up a USD 3 bn investment arm in Iraq to invest in sectors including infrastructure, mining, agriculture, real estate and financial services. (Reuters)
Germany is in recession: The German economy contracted for the second quarter in a row in 1Q 2023 as the country’s energy crunch and high inflation hit the eurozone’s largest economy. (Federal Statistical Office)
Chinese industry isn’t doing so well, either: Chinese industrial firms saw their profits fall more than 20% y-o-y in the first four months of the year amid weak client demand. (Reuters)

EGX30	17,044	-0.3% (YTD: +16.8%)
USD (CBE)	Buy 30.83	Sell 30.96
USD at CIB	Buy 30.85	Sell 30.95
Interest rates CBE	18.25% deposit	19.25% lending
Tadawul	11,185	-0.5% (YTD: +6.7%)
ADX	9,453	+0.6% (YTD: -7.4%)
DFM	3,541	+0.4% (YTD: +6.2%)
S&P 500	4,205	+1.3% (YTD: +9.5%)
FTSE 100	7,627	+0.7% (YTD: +2.4%)
Euro Stoxx 50	4,338	+1.6% (YTD: +14.3%)
Brent crude	USD 76.95	+0.9%
Natural gas (Nymex)	USD 2.42	-2.4%
Gold	USD 1,963.10	0.0%
BTC	USD 26,757	0.0% (YTD: +61.9%)

THE CLOSING BELL-

The EGX30 fell 0.3% at Thursday’s close on turnover of EGP 1.65 bn. Local investors were net buyers. The index is up 16.8% YTD.

In the green: Credit Agricole Egypt (+5.7%), Taaleem (+5.6%), and Edita (+3.9%).

In the red: Orascom Construction (-2.4%), Ibnsina Pharma (-2.3%) and Ezz Steel (-2.2%).

Egypt, EU discuss joint skills initiative

An Egyptian-European center for jobs is in the works: Plans to set up an Egyptian-European center to support employment in Europe were discussed by Emigration Minister Soha Gendy and EU ambassador to Egypt Christian Berger on Friday, according to a ministry statement. The center, which would operate similarly to the Egyptian-German Center for Jobs, Migration and Reintegration (EGC), would train Egyptian youth to work in Europe as well as “facilitate sponsorship and support the movement of skilled workers,” in part by ironing out bureaucratic restrictions and visa problems, according to the statement.

Hassan Abdalla passes the batton at AfDB meetings: Central Bank of Egypt (CBE) governor Hassan Abdalla passed on the chairmanship of the African Development Bank’s (AfDB) board of governors to Kenya at the closing session of the AfDB meetings in Sharm El Sheikh, according to a CBE statement. The handover will see Kenya play host to the bank’s 2024 annual meetings.

CALENDAR

MAY

17-31 May (Wednesday - Wednesday): Second round of applications for sixth phase of export subsidy program.

28 May (Sunday): House to reconvene.

28 May (Sunday): Builders of Egypt Forum, Nile Ritz-Carlton, Cairo.

28 May (Sunday): Turkish election run-off vote.

29 May (Monday): IEF-IGU Ministerial Gas Forum, Cairo.

29 May (Monday): Egyptian-Rwandan Investment and Trade Day, Helnan Landmark Hotel, Cairo.

30 May (Tuesday): Listed companies have until this date to report and publish their 1Q results.

JUNE

June: Indian representatives to discuss prospect investments in the Suez Canal.

June: Egyptian-Saudi business forum.

1-3 June (Thursday-Saturday): Fintech Industry retreat, Hurghada.

3-4 June (Saturday-Sunday): OPEC+ meeting, Vienna.

4 June (Sunday): Senate back in session.

4 June (Sunday): National Dialogue.

6 June (Tuesday): National Dialogue.

7-10 (Wednesday-Saturday): The second edition of Africa Health Excon.

8 June (Thursday): National Dialogue.

10 June (Saturday): Thanaweya Amma examinations begin.

12 June - 15 July (Monday-Saturday): Thanaweya Amma exams.

13-14 June (Tuesday-Wednesday): Federal Reserve interest rate meeting.

19-20 June (Monday-Tuesday): The forum for insolvency reforms and corporate restructuring in the Middle East and North Africa.

19-21 June (Monday-Wednesday): Egypt Infrastructure and Water Expo, Egypt International Exhibition Center.

19-21 June (Monday-Wednesday): Big 5 Construct, Egypt International Exhibition Center.

22 June (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

28 June-2 July (Wednesday-Sunday): Eid El Adha (TBC).

30 June (Friday): June 30 Revolution Day.

30 June (Friday): Egypt to exit Grains Trade Convention.

JULY

1 July: House of Representatives deadline to approve the FY 2023-2024 budget.

1 July: GAFI to launch the country’s first integrated electronic platform to facilitate setting up a business.

5 - 6 July (Monday - Tuesday): Gov’t to pay out subsidies to first wave of applicants under its sixth export subsidy program.

15 July (Saturday): Deadline for bids in EGPC’s mature oil fields tender.

18 July (Tuesday): Islamic New Year.

19 - 20 July (Wednesday - Thursday): Gov’t to pay out subsidies to second wave of applicants under its sixth export subsidy program.

20 July (Thursday): National holiday in observance of Islamic New Year (TBC).

23 July (Sunday): Revolution Day.

25-26 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

27 July (Thursday): National holiday in observance of Revolution Day.

Late July-14 August: 2Q2023 earnings season.

AUGUST

August: Hassan Allam Utilities + Agility to open Yanmu East logistics park.

2 - 3 August (Wednesday - Thursday): Gov’t to pay out subsidies to second wave of applicants under its sixth export subsidy program.

3 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

10 August (Thursday): Shalateen Mineral Resources gold mining tender closes.

22-24 August (Tuesday-Thursday): BRICS summit, Johannesburg, South Africa.

SEPTEMBER

September: Sustainable Debt Coalition Initiative agreed at COP27 to launch.

9-10 September (Saturday-Sunday): G20 summit, New Delhi, India.

15 September (Friday): IMF to review USD 3 bn program.

19-20 September (Tuesday-Wednesday): Federal Reserve interest rate meeting.

21 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

21-23 September (Thursday-Saturday): Narrative PR Summit, Somabay.

25 September (Monday): Nasdaq deadline for Swvl Holdings Corp to increase its market value of publicly held shares to a minimum of USD 15 mn.

26 September (Tuesday): Prophet Muhammad’s birthday (TBC).

28 September (Thursday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

OCTOBER

October: Deadline for ins. providers to link their databases with the FRA.

2-5 October (Monday-Thursday): ADIPEC 2023, Abu Dhabi National Exhibition Center.

6 October (Friday): Armed Forces Day.

13 October- 20 October (Friday-Friday): The sixth edition of El Gouna Film Festival (GFF).

Late October-14 November: 3Q2023 earnings season.

26 October (Thursday): Daylight saving time ends.

31 October - 1 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

NOVEMBER

November: Cairo to hostIntra-African Trade Fair.

2 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

15-24 November (Wednesday-Friday): Cairo International Film Festival, Cairo.

DECEMBER

10-11 December (Sunday-Monday): eGlobe Expo, St. Regis Almasa Hotel, Cairo.

12-13 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

21 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

2023: Egypt will host the Asian Infrastructure Investment Bank’s Annual Meeting of the Board of Governors in 2023.

Summer 2023: EGX to launch a shariah-compliant index.

1H 2023: GAFI roadshow set to launch to drum up foreign investment for golden licenses

1H 2023: Abu Dhabi Islamic Bank intends to launch a digital consumer finance company

2H 2023: Egyptian government expected to sign agreements with a consultant for the EuroAfrica electricity interconnector.

2H 2023: President Abdel Fattah El Sisi and Turkish President Recep Tayyip Erdogan expected to hold a summit.

3Q 2023: E-Finance to launch in Saudi Arabia.

4Q 2023: EGX to launch its new futures exchange.

End of 2023: A Developments’ first phase of the Lazoghly development completed.

(xxBE) 2024: Standard Chartered Bank to open a branch in Egypt.

November 2024: Egypt to host the 12th session of the World Urban Forum (WUF12).

2Q 2025: Safaga Terminal 2 to initiate operations.

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