IMF expects staff-level agreement over the summer, unlock USD 1.6 bn

Good morning, wonderful people. While the weather today is scorching, the news cycle is relatively calm. Leading the news this morning, four state-owned companies have secured temporary EGX listings as the government races to demonstrate divestment progress ahead of a 15 June IMF deadline.

Speaking of the IMF, an early mission from the Fund is already on the ground in Cairo, raising expectations of a staff-level agreement over the summer that would unlock a USD 1.6 bn disbursement.

On the monetary front, nine out of 10 analysts we polled expect the Central Bank of Egypt to keep interest rates on hold during Thursday's meeting as inflation remains well above the regulator’s target range.

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IMF summer payout on the horizon

A USD 1.6 bn disbursement from the IMF is in sight. A staff-level agreement on Egypt’s program review is expected to trigger an Executive Board vote to unlock the funding, IMF Communications Director Julie Kozack said in a press briefing on Thursday. Her remarks come a few days after a Fund mission quietly landed in Cairo to kick off the seventh review of the country’s economic reform program — more than a month earlier than originally anticipated.

The initial sentiment is optimistic, with Kozack noting that the government’s decisive policy actions have successfully eased external and fiscal pressures despite the ongoing war in the Middle East. The government filed updated structural reform credentials to the Fund before the mission arrived, intended to demonstrate that the system can weather future shocks without leaning heavily on external bailouts.

But there are challenges ahead. Kozack warned that the IMF is closely monitoring the conflict-driven energy crisis in the Middle East and its ripple effects on global fertilizer shipments. “We know from history that when fertilizer prices increase, it takes about six months or so for this to translate into increased food prices and, in some cases, reductions in yields and food security issues,” she said.

BP weighs offloading offshore assets

BP is considering selling off select natural gas assets in Egypt as part of a global restructuring effort to trim debt and prioritize higher-margin projects, Reuters reports. The potential divestment could be bad news for our natural gas markets and efforts to become a major LNG export hub along the Eastern Mediterranean corridor to Europe. The move targets BP’s joint ventures in the East Nile Delta and its operated fields in the West Nile Delta — totalling five offshore blocks, although no final decisions have been made.

Why it matters: BP has poured more than USD 35 bn into Egypt over six decades and once supplied 60% of the country’s natural gas, so this divestment would spark major change — but not an exit. Instead, it’s rebalancing toward higher-yield plays, having recently secured two new offshore exploration concessions and a 50% stake in the Temsah concession’s Denise W 1 well, which holds an estimated 2 tcf of natural gas.

Social bonds fund fiscal gap

The government issued USD 1 bn in inaugural international social bonds on Thursday at a steep 7.625% yield, Al Ahram reports, citing data from Bloomberg. The eight-year bonds received orders exceeding USD 3.9 bn, allowing the Finance Ministry to tighten pricing from the initial 8% guidance. Citi, Crédit Agricole, CIB, Deutsche Bank, and HSBC acted as joint lead managers.

The strategy: The bonds are being framed as part of a broader sovereign sustainable financing network, but they also help fulfill another purpose — funding the state’s fiscal gap. The state’s debt-servicing bill consumes an estimated 70-80% of tax revenues, and the official borrowing prospectus (pdf) identifies these issuances as a key mechanism for financing a portion of the fiscal deficit. Over the life of this bond, Egypt will pay out roughly USD 570 mn in interest on this issuance alone.

Redevelopment on El Opera

Cairo governorate will launch a public auction next week to redevelop the Opera’s administrative building in Downtown Cairo into a 175-key luxury hotel, Governor Ibrahim Saber told Al Arabiya. The building will be offered to hospitality investors under a 20-year usufruct agreement. The sale is part of the government’s goal to attract 25 mn tourists annually and add 250k new hotel rooms by 2030.

PSA-

WEATHER- It’s a scorching day in Cairo today, with the mercury standing as high as 41°C and a low of 24°C, according to our favorite weather app. Expect the mercury to remain high (around 38°C on Monday and Tuesday).

It’s enviously nicer in Alexandria, with a high of 31°C and a low of 20°C.

In a market defined by geopolitical risk, inflation, currency volatility, and declining interest rates, knowing how to manage your money has never been more important, and yet few people are really good at it.

The default in Egypt has traditionally been to dollarize, buy real estate, or stash your extra cash in a high-yield certificate of deposit, but that playbook is dying.

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The big story abroad

The business pages are focusing on the outcomes of the US-China summit in Beijing, which proved anti-climactic after failing to secure any commitments. It appears that the world’s two largest economies have returned to the familiar status quo that existed before President Donald Trump’s so-called “Liberation Day” in 2025 — a shift some are already labeling a victory for China. Ultimately, the lack of a Trump-driven paradigm shift means a precarious trade standoff remains.

More drama from the Fed: Two Trump-nominated Federal Reserve officials have criticized the Fed board’s decision to temporarily keep Jerome Powell in the position of chair until Kevin Warsh is officially sworn in. Fed board members Stephen Miran and Michelle Bowman slammed the “unlimited timeframe” of the temporary designation.

Meanwhile, on Wall Street: Although the Big Tech and AI equity rally seems as strong as ever, there is a very big asterisk, investors tell Bloomberg. Driven by optimism surrounding the AI boom, many investors are selling off government bonds, which is pushing yields higher. This spike in yields — combined with inflation risks and concentrated stock gains — could soon make corporate borrowing more expensive for tech companies while simultaneously making bonds a more attractive alternative to equities.

Speaking of which… could AI-related job cuts target entry-level jobs? Upwards of 40% of CEOs intend to slash junior roles and shift their workforce composition toward mid and senior-level roles, according to a global survey by Oliver Wyman. This appears to stem from AI agents’ ability to take on functions traditionally associated with junior positions, namely writing code and evaluating sales leads.