Good morning, wonderful people, and happy Thursday to you all. The week ends as it began, with news of a downgrade — and entirely expected one, as Moody’s wraps up its review of the five banks in Egypt that it covers.

THE BIG STORY HERE AT HOME- Our IMF loan review will come before the end of the year, Finance Minister Mohamed Maait told CNBC Arabia (watch, runtime:7:08) yesterday, without elaborating further. The IMF has delayed two reviews of our USD 3 bn assistance program after we failed to meet several conditions of the loan, including a commitment to implement a fully flexible exchange rate. IMF Managing Director Kristalina Georgieva recently said that the two sides are making progress on the review — and warned that we would continue to “bleed” reserves if we do not float the EGP. Maait was speaking on the sidelines of the IMF and World Bank annual meetings.

MEANWHILE- It feels a lot like MENA day at the IMF and World Bank annual meetings: Jihad Azour, the institution’s director for the Middle East and Central Asia, is scheduled to give a press briefing this morning and will later join Abu Dhabi Commercial Bank’s Monica Malik and others for a discussion about sustainable growth in the region. Maait will share the stage with the IMF”s deputy managing director Gita Gopinath at midday for an IMF seminar on “ boosting growth with domestic resources.”

What else is happening: The Civil Society Policy Forum is kicking off a day full of meetings on the MENA region, including discussions on social protection and the oversight of World Bank-funded projects.

WATCH THIS SPACE-

#1- Will the EGP be pegged against a basket of currencies? Fakhry El Fiqi, the head of the House Planning and Budget Committee, thinks so, telling Masaa DMC on Monday that authorities will likely reach an agreement with the IMF in 1Q 2024 on a new currency regime (watch, runtime: 13:07). El Fiqi said the EGP would be pegged to a basket of hard currencies including the USD, EUR, JPY, and GBP, as well as gold.

El Fiqi’s claims have been disputed: A state official, speaking on condition of anonymity, told Bloomberg Egypt wasn’t looking at a peg.

It seems to us that some officials are being careful to talk about an “index” as distinct from a “peg” — and it’s not immediately clear what the difference is. Asked yesterday whether we’re moving to a peg, a senior government official told us, “The USD will have the largest impact on the index, seeing its significance for commercial transactions and import bills. But the index aims to offer a stable indicator, showing the fair value of the EGP in comparison to other currencies.” Like El Fiqi, the official suggested that the index could launch in 1Q 2024 and said that the move will help strengthen our position in front of the IMF when the time comes to review the health of the economy ahead of unlocking more tranches of our USD 3 bn facility.

Remember: Central Bank of Egypt governor Hassan Abdalla last year floated the idea of settingup a currency index against which to value the EGP. The index, he said at the time, would be made up of several currencies and potentially gold. Egypt needs to stop “measuring” the EGP against the greenback to help people get used to the idea of a free-floating currency that is not pegged to the USD, Abdalla said at the time.

#2- Our debt service burden will continue to increase: The amount of money we need to earmark for debt service will “increase rapidly over the next few years,” in turn increasing our deficit, Ruud De Mooij, the IMF’s deputy director of fiscal affairs said during a press briefing yesterday. Our debt service currently takes up some 7% of our GDP, he said.

How can Egypt fill this gap? De Mooij pointed to reducing tax exemptions, cutting government spending by lifting fuel subsidies, and taking greater strides in our privatization program as ways to garner up some additional revenue.

Remember: Our debt load is already high. Egypt is going to have to spend USD 29.2 bn on debt service in 2024 alone, equating to more than 80% of its foreign reserves.

HAPPENING THIS WEEK-

Your trip to the grocery store could be a bit more affordable come Saturday: Business leaders and the Madbouly government agreed to reduce the prices of ten key fooditems by 15-25% in an attempt to tackle soaring food price inflation and ease the burden of the cost of living crisis. Inflation data from state statistics agency Capmas released earlier this week showed food and beverage prices rocketing 73.6% y-o-y as of September this year.

The plan looks like it's already in full swing:Ports welcomed 60k tons of beans and 150k tons of rice, Federation of Chambers of Commerce general secretary Alaa Ezz said during a phone-in with Ala Mas’ouleety (watch, runtime: 13:12). Ezz added that GASC had managed to secure 250k tons of Indian rice despite the country’s export ban and supplied factories with thousands of tons of sugar.

And manufacturers have been getting a helping hand: The Madbouly government has also started prioritizing goods needed by local food manufacturers from ports, Al Borsa reports, citing sources it says are in the know. The government is providing food manufacturers with the needed FX to secure imports as well as custom breaks in return for manufacturers reducing their prices.

PSA- Bidding deadline for 5 gold mine concessions extended: Shalateen Mineral Resources Company extended the deadline for companies to bid for gold mine concessions in five areas of the Eastern Desert to November from the previous 10 August deadline, Asharq Business reports.

THE BIG STORY ABROAD-

Israel’s formation of a unity government and Gaza’s humanitarian crisis are dominating the world’s front pages. Fiery rhetoric from Netanyahu that ‘every Hamas member is a dead man’ and a buildup of troops along the Gaza fence has led to many outlets to ask when, not if, a ground assault on Gaza may be launched. We have the latest in the news well, below. (Associated Press | Reuters | Bloomberg | Financial Times | New York Times | Washington Post | Wall Street Journal | BBC)

CORRECTION-

We goofed on the IMF figures yesterday: Our coverage of the IMF’s latest World Economic Outlook incorrectly attributed the Egypt growth figures to the 2023 and 2024 calendar years, instead of the FY 2022-23 and FY 2023-24 fiscal years. We have amended the story on our website. H/t Rafik S.

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