Egypt’s economy grew 5.2% in the first quarter of FY2017-18 from 3.4% in the same period last year, Planning Minister Hala El Said announced yesterday, reports Reuters. The government is targeting a growth rate of 5-5.25% for the full fiscal year.

The first quarter of the fiscal year also saw Egypt record its lowest primary budget deficit figure in a decade, according to a statement from the Ismail cabinet. The primary budget deficit dropped to 0.1% of GDP during the quarter, from 0.9% a year before. Results also show that Egypt, for the first time in years, achieved a primary surplus of around 0.2%. The overall budget deficit also shrunk to 1.9% of GDP, compared to 2.2% in the first quarter of the previous fiscal year. Government income also grew by 33% y-o-y, exceeding the 23% y-o-y growth in expenditures during the three-month period.

The IMF’s new Egypt boss, Subir Lall, had glowing things to say yesterday, noting that the nation’s economic reform program continues to pay off. He said in particular the drop in Egypt’s unemployment rate and rising FX reserves as other key metrics showing signs of improvement. Lall also praised the central bank’s monetary policy, saying he approved of the Monetary Policy Committee’s decision last week to leave our ridiculously high interest rates on hold, saying they will continue to keep inflation levels stable, Al Masry Al Youm reports.

(That last bit simply makes us want to scream: INTEREST RATES ARE NOT AN EFFECTIVE MEANS OF TRANSMITTING MONETARY POLICY IN A NATION WHERE AT LEAST 70% OF THE POPULATION IS UNBANKED. We get it, Mr. Lall. You let us here in Egypt off the hook and the IMF undercuts its bargaining position in the next market it needs to bail out — a market where, presumably, the majority of folks are banked. But still: Current interest rates are great for the carry trade, not so much for those of us looking to grow real businesses that create jobs and economic opportunities.)

Lall also had warnings on possible threats to the progress of the reform program. He pointed to regional instability and the rise in oil as some of the biggest risks facing the program. On the latter, he said that the government may need to reassess its spending if oil prices continue to rise. In an interview with Al Shorouk, Lall added that he does not see next year’s presidential election posing a risk to the reform agenda.

And speaking of the IMF, Egypt is set to receive its USD 2 bn loan tranche from the Fund in December, Finance Minister Amr El Garhy said yesterday. “The payment will bring total disbursements under the program to about USD 6 bn,” Reuters notes.

IPO WATCH- Ibnsina Pharma has priced its initial public offering on the Egyptian Exchange at EGP 5.21-5.95 per share, according to a statement released overnight (pdf). The transaction will see about 40% of the company (or some 269 mn shares) offered for sale, with the shares split between institutional investors (85% of the offering) and individual investors (15% of the offering). At the midpoint of the indicative price range, Egypt’s fastest-growing and second-largest distributor of pharma products would have a market cap of c. EGP 4 bn following completion of the associated capital increase. “The final price announcement will be determined in accordance with a book-building process and is expected to occur on 5 December 2017,” the company said. The offering to retail investors in Egypt will run 3-7 December, with trading expected to start on Monday, 11 December 2017. The announcement comes after the Financial Regulatory Authority approved Ibnsina’s public subscription notice. Beltone Investment Banking is acting as sole global coordinator and bookrunner and Matouk Bassiouny is acting as counsel to the issuer. Inktank Financial is investor relations advisor.

MOVES- Ibnsina has appointed our friend Mohamed Shawky as investor relations officer. Mohamed is well-known to veterans of the Egyptian IR community from his service as investor relations manager at Egyptian Resorts Company (2010-2014) and earlier runs on staff at the Egyptian Exchange. Shawky joined Ibnsina from Kuwait’s Mezzan Holding, where he was head of investor relations starting in late 2014.

M&A WATCH- Saudi Arabia’s Elaj Group has acquired Alexandria International Hospital and Ibn Sina Specialized Hospital, Al Mal reports citing sources close to the matter. (The latter is of no relation to Ibnsina Pharma, above). Elaj completed the transaction on Alexandria International earlier in the week, with the newspaper speculating that it had been done through over the counter transactions on the EGX over a period of a few weeks for an estimated EGP 35 mn. Elaj is planning an expansion to Ibn Sina following the acquisition.

Elaj is on something of a tear: The company acquired 74% of clinical laboratory group Cairo Labs for an estimated EGP 36 mn in October before adding to its portfolio a 15% stake in the International Eye Hospital.

INVESTMENT WATCH- Suez Canal Economic Zone (SCZone) Chairman Mohab Mamish is still saying that Mercedes-Benz had approved establishing a regional logistics and distribution hub in the zone. He said that the company had cleared their “tax hurdles” in Egypt and will launch operations “soon,” according to Al Mal. There has been no official confirmation from the company since Mamish first announced the auto maker was making a comeback in Egypt back in September. Mercedes said at the time it was still considering the move. Mamish is set to travel to Germany and the UK at the end of the month to drum interest in SCZone.

E-payments firm Fawry has locked down USD 20 mn in funding from a “foreign investment fund,” said CEO Ashraf Sabry, according to Daily News Egypt. Sabry did not disclose when the funding was closed or who was investing. The funding will be used to finance expansion plans with the aim of processing EGP 25 bn in electronic transactions by the end of the year and opening up branches and setting up infrastructure nationwide.

Meanwhile, the UK embassy launched a EGP 47 mn startup initiative called “Egypt Starts” in conjunction with the International Finance Corporation, the embassy said in a statement. The program, which will be managed by Flat6Labs, will provide mentorship and drum up seed funding for some 150 startups in Egypt. Ambassador John Casson said that the program aims attract EGP 100 mn in private investments. Entrepreneurs interested in the program can apply at http://www.startegypt.com/.

LEGISLATION WATCH- The Ismail Cabinet signed off on the Ride-hailing Apps Act and referred it the Council of State for review. The bill will regulate companies such as Uber and Careem and ostensibly aims to attract new investments to the ride-sharing and group transport industry. The law prohibits personal car users from extending ride-sharing services independently without being registered to an app. It also mandates the ministries of transport and interior to coordinate in issuing regulations on licensing procedures and fees for personal cars used in ride-sharing services.

The law will also introduce an Oyster Card-like type of ticket that will be valid across different modes of available transportation, said Transport Minister Hisham Arafat. We had reported this week that the House of Representatives’ ICT committee was gearing up to begin deliberating on the bill. The law will give companies and drivers six months to comply with new regulations once it’s issued.

There has been no official word from the government or ride-hailing companies on alleged provisions mandating that customer data be sent to authorities as first reported by the New York Times. Uber is currently in hot water with regulators in the US, the UK, and Australia after it was revealed that the company had hidden a data breach that saw hackers collect personal information of some 57 mn users worldwide, Reuters reports. Uber had paid USD 100k to the hackers so they would purge what they culled in the leak without informing the authorities or the victims of the hack.

The cabinet also signed off on a number other key decisions yesterday, including:

• The Finance Ministry’s agreement with consultancy firm EY to develop and digitize tax-related procedures and operations;
• Legislative amendments that will allow economic courts to handle consumer protection-related cases;
• Extending the deadline for tour companies in Luxor, Aswan, and South Sinai to settle government debt until 30 June 2018 from this December;
• Allowing contractors working on real estate projects another year to finalize their work;
• Amendments to the Civil Aviation Act that have now been referred to the Council of State.

Bookings for Turkey and Egypt in summer 2018 are already very strong, travel firm Thomas Cook says, according to Reuters. The company reported an 8% y-o-y increase in full year earnings, helped by a turnaround of its German airline Condor and improved customer demand. CEO Peter Fankhauser says Thomas Cook is redirecting capacity that went to Spain last summer to Egypt for 2018, according to TTG. He says Egypt is one of the destinations that provide a “fantastic” value for the money. He added: “We have a strong growth out of all the markets, especially out of the UK and even with the strong growth we are far away from the situation pre Arabian spring … There is big potential there still but we can only fly to Hurghada and Marsa Alam. There is no indication when Sharm airport may reopen and we totally rely on government advice for that.”

MOVES- Iflix appointed John Saad as CEO of Iflix Middle East and North Africa. Saad previously worked as chief consumer officer at Mobily in Saudi Arabia and before that held various roles at Vodafone, including consumer director at Vodafone Egypt and chief marketing officer at Vodafone Qatar.

Interior Ministry allows Qataris entry visas into Egypt? The Interior Ministry issued a directive reversing an earlier ban on granting Qatari citizens entry visa, a decision published on the Official Gazette on Wednesday, Al Shorouk reports. This comes as the Arab Quartet has expanded their terror list to include two organizations and 11 individuals, according to the Saudi Press Agency. The World Islamic Council and the International Union of Muslim Scholars were placed on the list for their connection to Qatar and the support it has provided them. Meanwhile, Qatar escalated opening a World Trade Organization dispute proceedings against the UAE, Saudi Arabia and Bahrain on Wednesday, according to Reuters.

Emaar Development’s first day of trading got off to a rocky start with shares trading sharply lower to start the session, according to The National. The stock closed the day down 4.3%, regaining some ground after diving 7% at the opening bell. Bloomberg reported last Saturday that the company had trouble completing the USD 1.3 bn IPO due to GCC stock markets falling victim to political turbulence in the region, and a massive corruption probe in Saudi Arabia. BofA Merrill Lynch, EFG Hermes, Emirates NBD Capital, First Abu Dhabi Bank and Goldman Sachs International were joint global coordinators for the offering. Emirates NBD and First Abu Dhabi Bank were the lead receiving banks.

On that front, a number of Saudi business leaders detained as part of the corruption probe have begun making payments to settle cases in exchange for their freedom, people with knowledge of the matter tell Bloomberg. “The government is looking to send a firm message in the recent sweep,” said Emad Mostaque, London-based co-chief investment officer of emerging-markets hedge fund Capricorn Fund Managers. No word yet on whether Alwaleed Bin Talal is among the businessmen settling.

Many US Federal Reserve policymakers said expect that interest rates will have to be raised in the “near term,” according to the minutes of the Fed policy meeting released on Wednesday. Fed policymakers said they still needed to see more data before deciding the timing of a rate hike, with many pointing to the low jobless rate and low inflation, Reuters reports.