Central Bank of Egypt Governor Tarek Amer sat down for a televised interview with DMC’s Osama Kamal on Friday in which he downplayed the impact of the float of the EGP and denied the central bank had subtly intervened in the market to support the national currency (watch the full interview, runtime 1:16:36).

Amer said he expects foreign debt to reach USD 60 bn, or about 30% of GDP, by June and projected the current account deficit will ease 50% to USD 10 bn this year, down from last year’s USD 18.7 bn. Imports are down 20% so far this year. He also said that Egypt has managed to repay USD 3 bn in international obligations in the past three months and suggested the backlog of importers and investors (we presume he means public market investors) waiting for USD allocations has been cleared. The CBE and Egyptian General Petroleum Corporation are coordinating to repay USD 1.5 bn in arrears owed to international oil companies this year.

Some USD 13.5 bn has flowed into local banks since the float of the EGP on 3 November, the governor said, supporting the ability of foreign companies to repatriate profits, Amer said.

Amer emphasized that he wished he could have floated the EGP earlier and said the negative impact of the move is not as bad as originally anticipated. The impact of the float will be transient, he said, stressing that what matters is not the exchange rate, but political and economic stability.

Amer denied speculation from some, including Renaissance Capital chief economist Charles Robertson, that the central bank had intervened to support the currency in a bid to curb inflation, helping the EGP rally against foreign currencies in the past week or so. The CBE cannot intervene in the market, he said — and doesn’t need to, as Egypt is on a “clear path to reform.”

Expect continued volatility in the exchange rate, Amer said, (correctly) declining to specify when pressed what he sees as the fair value for the EGP as being.

The Finance Ministry will send draft legislation to the House of Representatives in early March that will create a 0.2% stamp tax on stock market transactions, a Finance Ministry source told Reuters. The Both buyers and sellers will pay the tax on each transaction, making the effective rate on any given transaction 0.4%, split between both parties. The source says the Ministry is to begin applying the tax by May. He expects the stock market stamp tax to bring in EGP 1-1.5 bn in FY 2017-18, conditional on trading volumes. The source also hopes the House of Representatives will eventually raise the tax rate to 0.3%.

The rate proposed is below the 0.4-0.5% speculated by the market, Allen Sandeep, head of research at Naeem Brokerage, told Reuters, “so this is more of a relief for the market, which had been pricing in a much higher rate.” Sandeep says the 0.2% is an acceptable rate for an “emerging market like Egypt,” but he would have preferred the tax be deferred altogether given the “emphasis on attracting foreign capital.”

What will the stamp tax mean for the IPO pipeline in the first half of the year? That was the question Al Borsa asked a number of investment banks popular with retail investors. Some, including Prime Holdings CEO Mohamed Maher, believe that while the tax will have an effect, the success and failure of IPOs at drawing investments will primarily depend on how attractive the pricing of the companies will be. Pioneer Holdings’ head of brokerage Amer Abdel Kader takes the view that the stamp tax will have a negligible effect, as the EGP float has proven to be a major draw to investors that will be sustained after the tax is implemented. Others are not as optimistic, including Cairo Capital’s Ahmed Abou Hussein. AT Brokerage’s Mohamed Fattah Allah thinks that the tax would actually derail the IPOs of state-owned businesses.

Al Borsa expects six “major IPOs” in the first half of the year:

• Banque du Caire, with EFG Hermes and HSBC managing the transaction;
• Raya Holding (EFG Hermes);
• MM Group for Industry and International Trade (Beltone Financial);
• El Farasha for Printing and Packaging (Beltone Financial);
• DBK Pharma, with Pioneer Holdings managing the listing;
• Real estate developer Misr Italia, with Prime Holdings leading.

Could the government be forced to amend the value-added tax act? The executive regulations governing the value-added tax (VAT) may not be handed down as fast as Deputy Finance Minister Amr El Monayer had hoped: Maglis Al Dowla (the State Council) has concluded its review and says it has 30 proposed amendments that may necessitate revisions to the law itself, Al Borsa reports. Council officials say that some provisions of the draft regulations — such as those on tax-free shopping for foreigners, for example — are not provided for by the law that created the VAT.

The Council also finished its review of other laws and regulatory proposals, including one that essentially criminalizes cheating on high school exams by setting stricter punishments and higher fines. Teachers and administrators that leak or help circulate leaked exams could face 2-7 years in prison and fines of EGP 100-200k, while students caught cheating face a year in prison and fines of EGP 5-10k, newspaper says. Maglis Al Dowla also had remarks on the clauses of the legislation being prepared to establish a separate entity to govern nuclear power projects in Daba’a,

Meanwhile, the draft Labor Act is now before the House of Representatives after the State Council proposed 39 amendments to the275-article law. Al Masry Al Youm has the full rundown.

Egypt and Algeria could see their domestic wheat harvests swell 25% more this year than last if favourable weather projections hold, Bloomberg reports, noting, “That means imports from the region could drop from a record high to a three-year low, according to Chicago-based researcher AgResource Co. … While global demand for wheat has never been bigger, output has risen even faster, and prices have plunged for four straight years.”

The suggestion comes as state grain buyer General Authority for Supply Commodities (GASC), the world’s largest buyer of wheat, bought 360k tonnes of wheat from international markets, traders told Reuters. Broken down, GASC bought 300k tonnes of Russian wheat and 60k tonnes from Ukraine. This comes as Egypt finalized its rejection of 18,000 tonnes of Russian wheat that had originally been seized in November, saying it is unfit for human consumption due to the large number of insects found at the storage site in Dekheila port, Al Mal reports. The shipment will be returned to Russia.

Concerns about nuclear waste from the Daba’a power plant dominated debate at the state-sponsored public consultations held in Marsa Matrouh on Saturday, according to Al Mal. Electricity Minister Mohamed Shaker reassured citizens that the 4800 MW nuclear power plant being developed in partnership with Russia’s Rosatom will use the latest technology and safety precautions and that nuclear waste will be disposed of in accordance with international benchmarks, the newspaper adds. According to Shaker, the plant will be able to withstand the impact with a 400 tonne plane falling at a speed of 150 meters per second.

The project’s location was not a random choice, but a calculated decision based on dozens of tests and studies that determined the stability of the earth in the area, Environmental Affairs Agency chief Mona Kamal said.

Shaker told attendees that two of the four contracts for the plant have been finalized and two others should be reviewed over the next few weeks, but refused to give any specific deadline, Al Mal says. The contracts are expected to be signed in March, previous reports suggested. The Electricity Minister said that he intends to hold more meetings with community leaders at which he would delve deeper into the terms of the government’s contract with Rosatom. Shaker said the project will not only diversify Egypt's energy sources, but provide “tens of thousands” of job opportunities for the locals over eight years of construction

Russia’s Deputy Prime Minister Dmitry Rogozin will reportedly be in Cairo this week with a delegation from the Russian Energy Ministry, sources tell Al Ahram. The Russian ministers of foreign affairs and defense will also visit Egypt early in March for cooperation talks.

Rift between Saudi Arabia and Egypt remains, even if diplomats say everything is okay: Egyptian real estate companies have halted projects that were set to be implemented in Saudi Arabia, according to Reuters. Talaat Moustafa Group (TMG), Al Ahly for Real Estate Development, Orbit Alliance, and Misr-Italia Group had all signed MoUs to build houses in Saudi Arabia during King Salman’s visit to Egypt last April. TMG had explained at the time that it was going to assess developing housing projects on land provided by the Saudi government and, in return, will receive ownership of a number of units it constructs to compensate for the price of land. Al Ahly’s Chairman Hussein Sabbour said his company withdrew because of “because of worries over tensions between Egypt and Saudi Arabia,” despite having completed preliminary plans for the project. Misr-Italia said contact with their Saudi counterparts stopped since June and “the agreement was canceled due to a lack of cooperation from the Saudi side.” USD 22.65 bn worth of agreements and project MoUs were signed during Salman’s visit.

Egypt’s Foreign Affairs Ministry has insisted there is no need for mediation with Saudi Arabia, denying reports of a rift between the two countries, and saying that ties between Cairo and Jeddah run deep.

Afrexim Bank could extend financing to Egyptian real estate, clean energy and manufacturing projects worth a combined value of USD 1.199 bn, the bank’s director of banking operations, Heba Aboul Ezz, tells Al Borsa. Afrexim Bank president Benedict Oramah said at a press conference on Thursday that the bank has reached an agreement to provide the National Bank of Egypt with financing to support Egyptian exports to Africa, the newspaper reports. Oramah did not specify the value of the funding.

Tourist visas will more than double in price to USD 60 for single entry and USD 70 for multiple entry, up from USD 25, according to Al Shorouk. The Foreign Ministry had originally wanted to raise prices effective in March, but Prime Minister Sherif Ismail has decreed that it will go into effect in July, Youm7 reports. Tourism industry players claimed they were not informed of the decision ahead of time, and Egyptian Tourism Federation head Karim Mohsen said the federation has already received calls from international tour operators regarding the move, adding that he expects bookings to take a hit in the coming period, Al Borsa reports. Rep. Mohamed Badawy and former head of the Chamber of Tourism Companies Hossam El Shaer also criticized the move, saying it would deal a “lethal blow” to Egypt’s tourism if implemented, Al Shorouk reports. Price-sensitive travel to the Red Sea has recently been on the upswing.

** Earnings watch: Madinet Nasr Housing & Development reported a 187% year-on-year increase in consolidated net profit in FY2016. Revenues grew 162% to EGP 2.02 bn, the fastest rate of growth in the company’s history, according to a regulatory filing.

Christian families are fleeing their homes in North Sinai’s Al Arish, after Islamist terrorists killed another Coptic Christian this Friday, the Associated Press reported. The death was the sixth Christian to be killed in Sinai this month. The government responded by relocating the displaced citizens to Ismailia, Qalyubiyah, Cairo, and Asyut temporarily until the crisis is averted, Youm7 said. At President Abdel Fattah El Sisi’s request, Prime Minister Sherif Ismail ordered state bodies to coordinate with the various city governors to ensure that the families are being aided and that their medical needs are met. Daesh affiliates in the region had vowed to step up their attacks against the Christian population in a video released last week. The story is dominating international headlines on Egypt — see Egypt in the News, below, for more.