Inflation cools in July to 13.5% after surge in June: Annual headline inflation cooled to 13.5% in July, down from a high of 14.4% in June, according to data released by the central bank on Thursday (pdf). Monthly headline inflation reached 2.5% in July, according to data from CAPMAS. Annual core inflation — the CBE’s preferred gauge, which strips away volatile items such as food — sank further in July to 8.5%, down from 10.9% in June. Inflation levels in June had accelerated for the first time in a year and at a much faster pace than expected, after dropping to a two-year low in May, as a result of subsidy cuts to fuel, power, and transportation in July. “We expected the hike to be fully apparent in June and the reduced spending levels would let the impact fade away in July,” Beltone Financial’s Alia Mamdouh tells Reuters.

Analysts still expect the CBE’s Monetary Policy Committee (MPC) to keep the country’s key interest rates on hold at its 16 August meeting, despite the decline in inflation rates, the newswire notes. A number of experts had suggested last month that the MPC is likely to keep overnight deposit and lending rates unchanged at 16.75% and 17.75%, respectively, until the end of the year to allow the economy more time to fully absorb the shock of price hikes.

Eastern Company to be the first share sale in privatization program to be managed by private sector banks: It looks like the Eastern Company is the first company of the state privatization program to officially confirm that its share sale will be managed by a private sector bank. The company, which will pilot the program along with Heliopolis Housing and Development in October, signed a contract with state-owned NI Capital which will see the latter hold an international tender for private sector banks to manage the sale of an additional 4.5% of the company on the EGX, according to a regulatory filing by Eastern Company on Thursday (pdf). The filing confirms previous statements by Chemical Industries Holding Company (CIHC) Chairman Emad El Din Mostafa that NI Capital was organizing a limited tender for private sector banks to manage share sales for Eastern Company and Abu Qir Fertilizers. There is still no word on when a tender for advisers on Abu Qir will take place. Finance Minister Mohamed Maait had told us last week that NI Capital will manage three of the five initial wave of stake sales, with the remaining two up for grabs by the private sector.

Speaking of which, Oil Min confirms Abu Qir to list 30% stake on EGX in December: The government intends to float 30% of Abu Qir Fertilizers on the EGX this fiscal year as part of the first phase of its privatization program, Oil Minister Tarek El Molla said in a statement on Thursday confirming the timeline for the sale. The offering will see various government agencies and companies sell a part of their holdings in the fertilizer manufacturer, including the Industrial Development Authority (which will sell a 12.7% stake), Al Ahly Capital (8.1%), KIMA (2.7%), the Chemical Industries Holding Company (1.5%) and the National Investment Bank (5%). The Chemical Industries Holding Company had said it is hoping to raise more than EGP 3 bn from the sale of stakes in both companies.

In other company news, Abu Qir Fertilizers said it chose a consortium led by the National Bank of Egypt (NBE) to arrange a EGP 600 mn loan needed for its nitric acid project, according to a filing to the EGX carried by Al Mal. The consortium, which includes Banque Misr and Qatar National Bank, is also extending the company a EUR 105 mn facility that will also be used to finance the project. The NBE-led consortium beat out another consortium comprising EG Bank, Bank of Alexandria, Ahli United Bank, Emirates NBD, and United Bank.

Real estate taxes gripping the nation these past few weeks: The Finance Ministry’s attempts to reform and amend the real estate tax has seen it kick up a hornet’s nest in the local press and the airwaves these past few weeks. We attempt to chart these efforts and the reactions.

The story so far: A government source had revealed to us back in June that the Madbouly Cabinet was devising a new real estate tax formula as part of a major real estate tax overhaul that would impact both business and private landholdings. This new formula would set “clear and simplified” guidelines for the tax assessment of industrial properties, hotels, ports and airports, our sources told us. It was then revealed to us that the Finance Ministry had developeda real estate tax formula for the oil and gas industry, which already pays the highest corporate taxes in the nation. The ministry passed an amendment to real estate laws last month setting a 2.5% levy on the disposition or quick sale value of real estate assets. Furthermore, the ministry is reportedly planning to conduct a major survey and appraisal of the country’s real estate assets this year.

While the specifics of the new amendments are largely still a mystery, PricewaterhouseCoopers has an excellent brief in Arabic (pdf) on what was previously said and how it impacts current real estate tax legislation.

Naturally, the move has caused backlash among the business community and the general landowning public. Business associations, including Union of Investors Associations, are urging the Finance Ministry to end real estate taxes on industry land. The Union is now proposing a EGP 5,000 tax for every 1,000 sqm of land owned. Finance Minister Mohamed Maait reportedly promised them to revisit how the ministry taxes industrial land, according to Youm7. The backlash among private citizens was evident in the talk shows, prompting the ministry to repeatedly send officials to explain the tax on the airwaves. Opinion writers were not impressed by the efforts in handling this backlash.

More recently, the Finance Ministry decided on Thursday to push the deadline for real estate tax payments to 15 October from 15 August, according to an official statement (pdf). The extension comes penalty-free and at the Real Estate Tax Authority’s request due to overcrowding at their offices, which has led to long wait times. The ministry said this extension will be its last. The deadline for settling real estate had initially been set for 15 July.

While we’re on the topic, the central bank will not be freezing clients’ assets as a way of coercing them into paying their real estate taxes. Council of State Vice President and the CBE’s legal adviser Tamer El Daqaq told Ahram Online that “baseless” rumors suggesting as much have been swirling around, citing an unauthorized document. The CBE is taking legal action against those responsible for circulating the document and individuals who “spread the rumor,” according to El Daqaq.

INVESTMENT WATCH- China’s Sinoma International Engineering is looking to invest USD 100 mn in a new steel factory in Egypt, Chairman Zhijiang Liu told Investment Minister Sahar Nasr, according to a ministry statement. The plant is expected to produce around 2 mn tonnes per annum of steel, he said without elaborating.

But what of other Chinese investments? The announcement comes as Nasr met with a number of Chinese company executives and state officials in Cairo on Thursday, including representatives from China Fortune Land Development (CFLD). The company is currently ironing out the final details of its contract to develop 15k feddans at the new administrative capital. The companies, which were unnamed, all expressed interest in pumping new investments into Egypt in the coming period in light of recent reforms and incentives offered under the Investment Act, according to the statement. Let’s hope these don’t end up bogged down like CFLD or fall by the wayside in a manner similar to the zombie projects signed with the Chinese at the Egyptian Economic Development Conference.

On a related note, Egypt is expected to participate in the 2018 Forum on China-Africa Cooperation (FOCAC), which will be held in Beijing this September, according to the Investment Ministry. Members of the Egyptian-Chinese Business Council met with Nasr last week to discuss ways to attract more Chinese investment to Egypt, pointing to irrigation, grain storage, and textile manufacturing as fields where collaboration with Beijing would be particularly helpful.

IPO WATCH- Polyserve considers plans for an IPO : Fertilizers producer Polyserve Group is considering an initial public offering on the EGX, according to a disclosure to the EGX (pdf) from the International Agricultural Products Company (IAPC) — which owns 20.4% of Polyserve. The IAPC is also studying a plan to raise its stake in publicly-traded Ferchem Masr for Fertilizers and Chemicals (FERC) to 100% from 15.7%, “either directly or indirectly” by buying shares through a subsidiary, according to the statement. The disclosure notes that these plans are still under review with no concrete action having been taken as of yet. For its part, FERC issued a regulatory filing (pdf) stating that it has not received any acquisition offer as of yet.

EARNINGS WATCH- Egyptian Resorts Company (ERC) posted a net loss of EGP 9.3 mn in 1H2018, down from a net profit of EGP 47.5 mn in the comparable period last year, according to the company’s earnings release (pdf). Revenues were 53% lower y-o-y at EGP 63 mn, due to slowed sales activity. Despite that, service revenues increased 30% y-o-y to EGP 39.1 mn. Looking ahead, the company intends to focus on its cost-control policies as well as diversifying its product offerings and investing in new commercial and retail projects to enhance the value of its land bank.

Cheesemaker Obour Land reported a net profit of EGP 114.38 mn in 1H2018, up from EGP 95.99 mn in the same period last year, according to a bourse filing.

CORRECTION- We goofed on GB Auto’s earnings last week by reporting that its consolidated net profit of EGP 148.1 mn in 2Q2018 was up 52% y-o-y from EGP 33.5 mn. It was actually up 342.0% q-o-q from 1Q2018 from EGP 33.5 mn. The story has since been corrected on our website with our sincerest apologies.

Are Russian flights returning to the Red Sea this coming winter? A delegation of Russian tour companies reportedly expect flights between Moscow and Red Sea destinations to start up again in the winter. The group visited Hurghada last week to sample potential packages they could offer tourists when flights resume, Egypt Independent reports. Last we heard, talks between Russia and Egypt over the resumption of charter flights to Red Sea destinations were set to take place after the 2018 FIFA World Cup. Representatives of Egypt’s Civil Aviation Ministry had visited Russia during the tournament to discuss the timeline of the talks. Russia had restored direct flights between Cairo and Moscow in April following a ban instituted since the Metrojet crash in 2015.

In other news from the Ruskies, the first unit for the dry storage of spent nuclear fuel from the Dabaa power plant are expected to be ready before 2028, when the plant is expected to come fully online, Russia’s Deputy Industry and Trade Minister Georgy Kalamanov said on Thursday, RT’s Arabic service reports. The units will be portable and allow Rosatom, who’s building the Dabaa nuclear power plant, to move the fuel to be reused at any of its other projects around the world. Construction on the USD 30 bn is expected to begin in just over two years. The names of local contractors who will be hired to work on the project should be announced in two months’ time.

Gov’t transparency project #1 — FinMin launches new digital platform to monitor government transactions and expenses: Finance Minister Mohamed Maait announced on Thursday the launch of a new digital platform through which all state ministers and governors can keep track of their respective budgets and expenditures, according to a ministry statement (pdf). The new system is expected to tighten control over state finances and enhance both transparency and accountability, according to Maait. The move is part of the government’s plan to transition towards a cashless economy — which is at the heart of the economic reform agenda, the minister said. The House of Representatives had approved amendments to the Accounting Act last month, which enshrine the transition towards a cashless economy, making it mandatory for all government transactions to be electronic, and banning the use of paper cheques for transactions above a set threshold. The move is meant to help regulate public spending.

Gov’t transparency project #2 — Cabinet to form much-needed media office to consolidate all government comms: Prime Minister Mostafa Madbouly ordered on Thursday the establishment of a single media office to streamline the government’s communication with the media and public, according to a cabinet statement. The new office, which will fall under the mandate of the cabinet’s Information and Decision Support Center (IDSC), will consist of four main units, one for each type of media (press, audio visual, and social media), as well as an analytical unit to monitor coverage of government news in all three mediums. The office will be run by the head of cabinet’s own media office, Naayem Saad Zaghloul, and supervised by Madbouly’s personal media advisor Hani Younes.

The Madbouly Cabinet definitely gets bonus points for this one. More than one of us here at Enterprise had been secretly hoping the government would take such a step to filter through the endless hours of noise and miscommunication. We never imagined this day would actually come (sniff, sniff).

MOVES- CBE Governor Tarek Amer was named president of the Association of African Central Banks (AACB) for the 2018/19 session. Amer is the first Egyptian CBE governor to take on the job. The 2018 AACB meetings wrapped up in Sharm El Sheikh last week.

Security forces block suicide bomber from attacking church: Security forces prevented a suicide bomber from entering a church in Qalyubiyah, causing the attacker to detonate his suicide vest 250 m away from the church causing no other casualties besides himself, Reuters reports, citing MENA. Coptic Christians had gathered at the church to celebrate the Virgin Mary’s birthday. “Strict security on the road to the Lady Virgin Church in the area of [Mostorod] prevented the would-be attacker from coming too close to the place where hundreds of Coptic Christians were gathering at the annual festival,” police sources said, according to Gulf News. No group has claimed responsibility from the attack. Yesterday’s attempted bombing is the latest in a series of attacks launched by Islamist militants against Coptic Christians, including a gun attack last December at a church and shop in Helwan that left 11 dead and twin bombings on Palm Sunday last year that killed 47.

The story is topping coverage of Egypt in the foreign press this morning, with Xinhua, the Associated Press, RT, and Al Arabiya among those taking note.