Central Bank of Egypt hikes rates by 200 bps in bid to tame inflation

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What We're Tracking Today

THIS MORNING: The Central Bank of Egypt’s rate hike. PLUS: Public sector wage and pension hikes in effect + Daylight savings up for vote in the House

Good morning, folks, and welcome to a new week, in a new month, in a new quarter. We’re ringing in 2Q with another busy newsday, reinforcing our suspicion that the traditional Ramadan news slowdown just isn’t going to happen this year. The headline story: the central bank’s move on Thursday to hike interest rates by 200 basis points in a bid to curb inflation.

THE BIG STORY THIS MORNING-

Last Thursday saw the Central Bank of Egypt go through with its first interest rate hike of 2023. The central bank met most analysts’ expectations with a sizable rate hike of 200 basis points (bps), its first change to interest rates following a combined 800 bps of hikes in 2022. Three of the seven analysts we polled last week were bang on the money — and six of seven expected rates to rise.

But no further deval (yet): The devaluation of the EGP against the USD that some had been predicting to come alongside the rate hike simply … never materialized. The EGP is still changing hands at around 30.96 to the USD according to the official central bank rate. The currency has been holding steady at that rate for the past three weeks, but 12-month non-deliverable forwards are pointing to about EGP 40.00 to the greenback, while the (anemic) parallel market sees the USD changing hands for EGP 35-36.

And no new high-interest certificates coming -NBE: The National Bank of Egypt (NBE) is not launching new high-interest certificates of deposit following the MPC’s decision, Vice Chairman Yehia Aboul Fotouh said Thursday. This came in response to rumors circulating online that the state-owned bank would begin offering new certificates at a 25-30% rate. NBE and Banque Misr both offered record-high 25% yields on one-year CDs for a period of time in January, coinciding with the devaluation of the EGP, which fell 20% during the first two weeks of the year.

We have chapter and verse on the CBE’s rate hike in this morning’s news well, below.

IN EFFECT-

#1- A package of wage and pension hikes is now in effect after President Abdel Fattah El Sisi signed the bill into law on Wednesday, according to theOfficial Gazette. The EGP 165 bn package includes EGP 10 bn to raise public-sector wages and pension payouts, and EGP 85 bn to cover debt service for the final quarter of the current fiscal year.

#2- A bill allowing informal industrial projects to obtain temporary licenses of up to three years was also ratified by the Sisi administration on Thursday. The law gives the Industrial Development Authority (IDA) the power to provide informal industrial establishments with one-year licenses to operate while owners legalize their businesses. The Trade Ministry will be able to extend these licenses by up to two more years on the IDA’s recommendation. Both laws were greenlit by the House last month.

#3- Higher Suez Canal transit fees for oil tankers: As of yesterday, the Suez Canal Authority has raised fees for oil ships transiting the waterway. Tankers carrying crude oil and petroleum products now have to pay a 25% surcharge while their empty counterparts are paying an extra 15%, up from an additional 5% for both laden and ballast vessels.

HAPPENING TODAY-

Welcome to a brand new month — and a brand new quarter. Here’s what to look out for over the next week or two:

PMI: S&P Global will release Egypt’s PMI figures on Tuesday, 4 April.
Foreign reserves: Expect the central bank to publish March’s foreign reserves figures before the end of this week.
Inflation: The CBE and Capmas will be out with March inflation data on Monday, 10 April.

The House is back in session today and tomorrow after a 12-day break.

Near the top of their agenda: Next fiscal year’s state budget is with the House: The FY 2023-2024 budget will be sent to the House Budget Committee today. The committee won’t start discussing the budget until Finance Minister Mohamed Maait and Planning Minister Hala El Said deliver their statements on it to the House at large.

AND- MPs will hold discussions and then vote today on the potential comeback ofdaylight saving time, which would see Cairo Local Time (CLT) pushed forward by one hour from the last Friday of April through to the last Thursday of October. The House Local Administration Committee approved the draft bill last week.

Could changing the clocks save us USD 25 mn worth of natgas per year? That’s the claim in a note from the government to the House ahead of today’s vote. The jury is very much still out among global researchers as to whether daylight savings time is a bonafide energy saver.

Also up for discussion and a vote today:

A bill that would fine media organizations and social media users for sharing fake weather news;
Three USAID grants for higher education, trade and investments, and economic governance;
The Pachin takeover: Prime Minister Moustafa Madbouly will answer questions from opposition MP MahaAbdel Nasser on the sale of state-owned Pachin (we have more on that story below).

SO, WHEN DO WE EAT? We’ll be breaking our fasts this evening at 6:14pm CLT and you’ll have until 4:14am tomorrow to hydrate and have a bite to eat.

WATCH THIS SPACE- Loss and damage fund up and running by November? The landmark loss and damage fund agreed by countries at last year’s COP27 could be established by the time COP28 takes place in the UAE in November, Egypt's lead climate negotiator, Amb. Mohamed Nasr, said Thursday, according to Reuters. Nasr last week led an initial round of discussions in Luxor by a committee responsible for ironing out the details of the fund and implementing the COP27 agreement. “Will it be created? I hope so and I assume so, and this is what we are working towards,” he told an online briefing. “Will it be delivering? I think this is a question of how complex this fund will be, and what will be the governing modalities and the working modalities of the fund.”

SETTING THE RECORD STRAIGHT- The real estate + exchange rate frenzy: Leading real estate developers have denied claims circulating on social media and picked up by the local press that they are indexing homebuyers' payments to the EGP / USD exchange rate or outright canceling sales contracts in the wake of the EGP’s devaluation.

Ora Developers Egypt denied the rumors in a statement(pdf) out on Thursday, saying that the company’s “sale transactions are done in EGP and that the company has no intention of changing the payment currency or linking the price on any units to the USD.” A second high-profile developer we contacted denied it was canceling sales contracts, but declined to comment on the record, citing a policy of not responding to unfounded rumors on social media.

FROM THE RUMOR MILL- Chinese-Saudi consortium eyeing a stake in Elsewedy Electric? A Gulf sovereign fund and a Chinese company are reportedly looking to buy a minority stake in Elsewedy Electric, Shorouk News reports, citing sources it says have knowledge of the potential investments. The potential buyers are currently in talks with their advisors to look into how they might go about the transaction. The company is majority owned by members of the Elsewedy family, with the remainder in freefloat.

OBITUARY- Al Tamimi & Company partner Ehab Taha passed away on Friday. Taha spent more than two decades as a partner at several flagship Egyptian firms, as well as co-founding TMS Law Firm in 2016 and also served as an assistant public prosecutor. He was the head of Al Tamimi’s corporate commercial department.

THE BIG STORY ABROAD-

The Trump news cycle is well and truly back: The man who never saw a headline he didn’t want to be in is once again set to dominate the US news cycle becoming on Thursday the first former president in the history of the United States to be indicted after leaving office. Agent Orange is preparing to face more than 30 criminal charges related to alleged fraud after a Manhattan grand jury voted to indict him, setting the stage for a court appearance this Tuesday. The charges remain under seal but they’re understood to be connected to hush money payments allegedly made to adult film star Stormy Daniels to suppress information related to an extramarital affair.

Trump has been in full Truth Mode over on his social media platform, Truth Social, describing the charges as “political persecution and election interference at the highest level in history” to his 5 mn followers. “This is an attack on our country the likes of which has never been seen before,” he said.

AND- Twitter as the digital bank of Musk’s dreams? Turning the social media platform into “the biggest financial institution in the world” (a USD 250 bn payments empire) is Elon Musk’s latest plan to turn around Twitter, the WSJ is reporting.

Meanwhile in Europe: Finland is set to become a NATO member while Swedenawaits Turkey’s blessings. Turkey was the last of 30 NATO members to approve a bill allowing Finland to join the alliance but is still holding off on Sweden’s membership request. (Reuters)

MORNING MUST READ-

“Let's do something we're both comfortable with.” The most feared sentence among a growing number of people seeking, er, ‘digital love’ from AI chatbots. In response to a surge in use, some developers in the industry are now preventing their technologies from being used for X-rated activities. But moves to make them less licentious are revealing the degrees to which people can become mentally and physically attached to artificial intelligence. Reuters has more.

War there is. Voice recording I must make. The only thing worse than fleeing Russian bombs in Ukraine? Doing so while being reminded how much of a [redacted] the Last Jedi was. That’s what Mark Hamill is accomplishing in his — philanthropic? — decision to lend his voice to air raid alerts in the war torn country. “Attention, the air alert is over. May the force be with you,” Hamill says, reassuring the residents of Bakhmut that the guy who played Luke Skywalker is here to help.

THE REALIGNMENT-

China + Brazil just ditched the USD (in bilateral trade): China and Brazil will conduct bilateral trade — worth more than USD 150.5 bn last year — in their own currencies after agreeing last week to stop using the greenback as an intermediary currency. This is the latest step in a trend toward de-dollarization that, since Washington last year tried to weaponize the USD-based global financial system against Russia for its invasion of Ukraine, has seen a number of countries (including Russia, India, Saudi Arabia, Turkey and Egypt) look to decrease their reliance on the USD in international trade. (AFP)

The brain behind BRIC wants more: Jim O’Neill, the former Goldman Sachs chief economist who first coined the term BRIC (Brazil, Russia, India, China), has called on member nations to accelerate moves to drop the greenback in international trade. “The USD plays a far too dominant role in global finance,” he wrote in a paper last week, noting the destabilizing influence US monetary policy has on developing nations. (Bloomberg)

Riyadh-Beijing ties are growing: Saudi Arabia will become a dialogue partner in the Shanghai Cooperation Organization, allowing it to eventually become a full member of the China-led trade and security alliance. In contrast to its increasingly fractious ties with the Biden administration, Saudi’s relationship with China has warmed significantly in recent months, with the two sides heralding a “new era” in bilateral ties at a joint summit in Riyadh in December. China followed it up by brokering a major agreement between KSA and its arch foe Iran. (Financial Times) Egypt and Qatar also recently became dialogue members of the SCO.

^^ Egypt isn’t separate from any of this: We have more in this morning’s Also on our Radar section, below.

CLARIFICATIONS + CORRECTIONS-

CORRECTION- In Thursday’s edition of EnterpriseAM, we incorrectly referred to ADevelopments — which just landed an agreement with the Sovereign Fund of Egypt to develop the former Interior Ministry HQ in Downtown Cairo — as A Investments. The story has been updated on our web edition.

The Downtown revamp is getting international ink:Bloomberg took note of the project over the weekend.

CLARIFICATION- Ali Afifi has been promoted to vice president at EFG Hermes Research, the research division of EFG Hermes Holding — not the wider holding company as some readers may have inferred from our coverage on Thursday. The story has been amended to clarify this on our website.

We are delighted to share with you that the Enterprise Exports & FDI Forum will be taking place on Monday, 15 May at the Four Seasons Hotel at Nile Plaza.

DO YOU WANT TO ATTEND? The first wave of invites is going out soon. If you’re a C-suite exec, exporter, investor, official, banker, or someone who should be part of the conversation, please TAP OR CLICK HEREto request a spot at this exclusive event.

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Egypt’s central bank delivers large rate hike to curb inflation

The CBE did exactly what everyone expected on Thursday: The Central Bankof Egypt (CBE) raised interest rates by 200 bps on Thursday in a bid to rein in inflation. The Monetary Policy Committee (MPC) bumped up the deposit rate to 18.25% and the lending rate to 19.25% after leaving rates on hold last month, it said in a statement (pdf). The bank’s main operation and disc. rates were also raised to 18.75%.

The hike came in line with analyst expectations: All but one of seven analysts we polledlast week expected policymakers to raise interest rates, with three expecting a 200-bps hike and two penciling in a larger 300-bps hike. The MPC unexpectedly opted to leave rates unchanged at its last meeting in February, saying that it wanted to gauge the impact of the combined 800 bps of rate hikes it made in 2022.

Inflation is running at its highest level in five-and-a-half-years, surging to31.9% in February, as the ongoing currency depreciation and strong demand leading up to Ramadan sent food prices spiking to new record highs. “The MPC stresses that achieving a tight monetary stance is a necessary condition to attain the CBE’s upcoming inflation targets of 7% (±2 percentage points) on average by 2024 4Q and 5%(±2 percentage points) on average by 2026 4Q,” the central bank said.

Not enough, says bond market: The central bank is going to have to raise interest rates higher and bring down inflation before foreign bond investors return to the local debt market, analysts told Bloomberg. Even after Thursday’s hike, Egypt’s real interest rate remains deeply negative, which — together with continued uncertainty about the stability of the currency — gives investors little incentive to return to the market, the business newswire claims.

High-wire act: The central bank is trying to bring down inflation while preventing the economy from falling into recession and avoiding raising government borrowing to unsustainable levels, Bloomberg points out.

“The latest rate hike will not likely bring prices on a disinflationary path but will rather contain inflation from spiraling out of control,” Prime Securities Head of Research Amr El Alfy told us. He said that while rising yields are becoming more attractive for investors, the FX risk can eliminate any gains before they’re realized. El Alfy is forecasting the currency to fall gradually to EGP 32.50 / USD by the end of 2Q 2023 before recovering to EGP 30.00 by the end of the year.

“The hike is too small to catalyze significant capital inflows, and thus is unlikely to ease pressure on the [EGP] or alleviate the FX scarcity issues the economy is facing,” Farouk Soussa, MENA economist at Goldman Sachs, wrote in a note picked up by Bloomberg, calling on policymakers to maintain currency flexibility and accelerate asset sales.

But inflation-fighting credibility strengthened: “The increase in interest rates should help to improve the perception that the central bank is committed to its inflation-targeting framework,” Capital Economics’ James Swanston wrote in a note. Unlike Goldman, Swanston thinks that the higher rates could help Egypt draw more inflows and support the EGP.

“We do not expect any action until the CBE has secured some more FX firepower from outside,” Naeem Brokerage’s head of research Allen Sandeep told us. “Without the added FX liquidity, a standalone deval would only create another higher floor for the parallel market rate to operate on.”

Investor appetite hinges on progress in selling state assets: “For any significant portfolio inflows to resume, we need to first see a few big state asset sales transacted as part of the privatization program, and participation from the GCC bloc,” Sandeep said.

Further tightening ahead? Capital Economics’ Swanston expects the CBE to raise rates by another 200 bps in the coming months, noting the “hawkish tone” of the central bank’s statement.

The news got ink in the foreign press:Reuters | AP | Bloomberg.

BACKGROUND- The USD-EGP rate in the parallel hasve deviated further from the official rate in recent days and non-deliverable forwards are suggesting a rate of EGP 40 a year from now. The EGP has already lost almost half of its value against the greenback over the past year after the CBE undertook three devaluations to ease external pressures triggered by the conflict in Ukraine.

Egypt auto sales fall 76% in February

The automotive industry can’t catch a break right now: The yearlong decline in auto sales accelerated in February as the foreign currency shortage continues to weigh on the sector. Sales were down 76% y-o-y last month, with distributors selling fewer than 6.1k vehicles compared to 25.6k in the same month in 2022, according to figures released by the Automotive Marketing Information Council (AMIC).

The breakdown: On a y-o-y basis passenger car sales were down by 78% to 4.3k units from 19.7k units in February 2022, while bus sales were down by 54% and truck sales were 75% lower. AMIC figures reflect data contributed by member distributors, who include most (but not all) industry participants.

The start of a turnaround? Passenger car sales inch up from January: Sales volumes rose on a monthly basis for the first time in a year thanks to a pickup in passenger car sales, which rose 24% from January. Bus volumes fell by 5% and truck sales volumes were 8% lower than in January.

REFRESHER- The auto industry has seen better days. Total sales volumes fell more than athird in 2022 after capital controls in place for most of the year made it almost impossible for distributors to import cars and components — and forced a number of global car manufacturers to suspend sales to Egypt.

Industry players that Enterprise spoke with in March were optimisticthat 2023 will mark a turning point for the sector as the government rolls back import restrictions while introducing policies to encourage local and international investment.

NPH ups its bid for Pachin by c.5% as takeover battle heats up

NPH raises its bid for Pachin: Dubai-based National Paints Holding (NPH) has upped its offer for EGX-listed Paint and Chemical Industries (Pachin) in response to Eagle Chemicals’ new bid last week, the Financial Regulatory Authority (FRA) said in an EGX disclosure (pdf) on Thursday.

The Emirati firm is now offering to purchase at least 75% of the state-owned company for EGP 37.75 per share, up from its earlier offer of EGP 36.00 per share, the statement reads. This is EGP 0.75 per share higher than Eagle Chemicals’ most recent EGP 37.00 bid. NPH’s new offer values the company at EGP 906 mn, according to our calculations. Everything else in the NPH offer is unchanged, according to the statement.

REMEMBER- Pachin shareholders have until market close on 12 April to decide if they want to part with their shares to either NPH or Eagle Chemicals.

Market reax:Pachin’s shares rose 3% to EGP 39.71 on Thursday.

Compass Capital: raise or fold? An unconfirmed local media report last week claimed that Compass Capital is preparing to submit a rival MTO within days. The company has reportedly completed due diligence on Pachin and is ready to put a rival bid to shareholders, unnamed sources close to the matter reportedly said. Compass in January submitted a non-binding offer to acquire a stake of 51-90% in Pachin for EGP 30.00 per share.

REMEMBER- The play for Pachin comes amid the government’s privatization push, which should see it reduce its involvement in or exit certain industries to make way for the private sector. Pachin is currently approximately 54% owned by state-owned companies and banks.

ADVISORS-Al Ahly Pharos is financial advisor to Pachin while Shalakany Law Office is counsel. Matouk Bassiouny & Hennawy are acting as NPH’s legal counsel, while Nour Law Office is counsel to Eagle Chemicals alongside Al Tamimi & Company. Marei, Fayez, Dardiry & Partners is legal advisor to Compass Capital. HC Brokerage is brokering the transaction.

Egypt’s Madinet Masr to hike capex spend by two-thirds in 2023

Madinet Masr to invest EGP 3 bn in 2023: Madinet Masr for Housing and Development (MMHD) will invest as much as EGP 3 bn in Egypt this year, Hapi Journal quotes MNHD Managing Director and CEO Abdallah Sallam as saying. The company, which last week rebranded to change its name from Madinet Nasr, will spend most of the money on construction work, he said, as it looks to meet delivery dates at its flagship Sarai and Taj City projects.

That’s over EGP 1 bn more than last year: MMHD allocated EGP 1.8 bn to construction and infrastructure capex in 2022, it said in its recent earnings release (pdf).

MMHD doubled deliveries last year: The company increased its delivery of residential units to nearly 2.1k in 2022 from just over 1.0k the year before.

The company is expanding beyond the capital: The real estate developer is launching a new development this year in Assiut, its first project outside of Cairo, Sallamsaid at a press conference last week. It is also looking to acquire land in the new administrative capital.

And potentially beyond Egypt’s borders: MMHD is keeping its eyes open for potential investments in the Gulf, Sallam said, without providing further details. A company representative declined to comment further on Sallam’s statements when we reached out on Thursday.

Madinet Masr to issue more securitized bonds: MMHD intends to close a fresh securitization later this year, Sallam told Hapi. He did not disclose the potential size of the issuance.

MMHD has made one securitization so far in 2023: The company last month sold almost EGP 806 mn of securitized receivables to investors. This was the second installment of a EGP 3 bn, three-year program started in January 2022.

Islamic Development Bank extends EUR 318 mn to fund Egypt’s first high-speed rail line

The Islamic Development Bank (IsDB) will provide us with EUR 318 mn in financing for the660-km first phase of the Sokhna-Alexandria high-speed rail line, after the bank’s board approved the move during its meeting yesterday, according to an IsDB press release. Further details about the terms of the financing were not disclosed.

European bank finance in the pipeline: Cabinet last week said it had approved international funding for the high-speed rail link from European banks, without disclosing further info. The entire project is set to cost some USD 23 bn.

High-speed rail? Siemens Mobility, Orascom Construction, and Arab Contractorshave signed contracts with the government to build the 2k-km national high-speed rail line. The first phase will link Ain Sokhna to Marsa Matrouh, while additional lines will join Cairo to Abu Simbel and Luxor and Hurghada. Deutsche Bahn and El Sewedy Electric are on board to manage and operate the first line under a EUR 1 bn+ contract signed last year. The project is set to be the sixth-longest rail network in the world, connecting 60 Egyptian cities with trains running at up to 230 km/h.

Work is starting soon: French construction firm NGE and its subsidiary TSO should begin laying the first half of track for the rail’s first phase “in early 2023.”

Egyptian talk shows celebrate 6 October victory + Al Ahly’s latest win

Yet another quiet Ramadan night on the airwaves: The two stories worth noting were President Abdel Fattah El Sisi’s speech honoring Egyptian army officers and Al Ahly’s victory against Sudan’s Al Hilal in the CAF Champions League.

A message of reassurance on the economy from El Sisi: “Yes, there is a major global economic crisis that has dire consequences for us … but despite that we are still holding on and we will overcome it,” El Sisi said (watch, runtime: 2:31) during his speech at an event celebrating the 6th of October victory, which fell on the tenth day of Ramadan in 1973.

A salute to the Egyptian army: El Sisi also voiced his appreciation for Armed Forces personnel combating terrorism in Sinai (watch, runtime: 15:16 | 2:10 | 2:23).

The pundits celebrated Al Ahly’s progression to the CAF Champions League quarter-finals: Al Ahly beat Sudan’s Al Hilal 3-0 yesterday, sending them through to the tournament’s quarter-finals. Al Ahly fans took to the streets to celebrate the Red Devils’ win. El Hekaya (watch, runtime: 2:06) and Ala Mas’ouleety (watch, runtime: 3:52) both had coverage.

Alcazar Energy praises Egyptian government’s renewables contracts

Alcazar Energy is singing the praises of our renewables sector in the WallStreet Journal, with company co-founder and managing director Daniel Calderon telling the paper that fixed-price long-term offtake agreements from South Mediterranean governments including Egypt’s are making wind, solar, and green hydrogen projects an attractive prospect to developers. Alcazar and K&K have proposed to build a green ammonia facility here and the company is also eyeing new renewables projects in partnership with Egypt-based Madkour Group.

OTHER BUSINESS HEADLINES- Western grain traders’ exit from Russia won’t impact its wheat exports to markets including Egypt, according to Bloomberg, while the National snaps the efficient farming techniques at Bustan Aquaponics’ farm in Cairo.

AND- Stories on interfaith relations, rights, roller skaters, and Ramadan.

El Sisi ratifies Egypt’s membership of BRICS’ New Development Bank. PLUS: food security, trade with India in INR?

DEVELOPMENT FINANCE-

Egypt is now a member of the BRICS’ development bank:President Abdel Fattah El Sisi has signed off on a multilateral agreement for Egypt to become a member of the BRICS’ USD 100 bn multilateral lender New Development Bank (NDB), according to a Foreign Ministry decision published in the Official Gazette on Thursday. The president signed the decision into law on 2 February, just a few days after MPs approved the move.

About the NDB:The NDB is a multilateral development bank set up in 2014 by the BRICS — a group of high-profile EM including Brazil, Russia, India, China and South Africa — to fund infrastructure projects in its member countries.

Why this matters: Membership will allow Egypt to access finance from the bank for development projects. “Egypt joining the BRICS Group's New Development Bank will also help reduce demand for USD as bank members can use their national currencies in exchange of trade," Deputy Chairman of the House Economic Committee Mohamed Abdel Hamid said in January.

After the big five, Egypt will be the bank’s largest shareholder:Egypt is set to contribute around USD 1.2 bn to the lender’s capital, giving it ownership of c.2.3% of its shares, according to the lender’s website. Egypt will have the option to up its share of the lender’s capital and ultimately its share ownership and voting rights within the next few years, according to a government document seen by Enterprise. The two other shareholders — the UAE and Bangladesh — currently each own less than 2% of the bank’s shares.

TRADE FINANCE-

Indian official confirms: Egypt is interested in using the INR for trade. Egypt is among several countries to have shown interest in using the Indian currency for trade, an Indian government official told reporters last week, Bloomberg reports. This came shortly after the country’s commerce secretary said that New Delhi would allow nations experiencing a USD crunch to use the INR. Adopting INR trade would help countries “disaster proof” themselves against currency risk caused by the Federal Reserve’s hawkish monetary policy, Sunil Barthwal said Friday.

El Moselhy said as much last month: “Egypt is currently studying exchanging trade with China and India in local currencies in the same way we are working to adopt the RUB and the EGP,” Supply Minister Ali El Moselhy said last month.

Egypt and Russia have in recent months been working to increase the use of the EGP and the RUB in bilateral trade: The Russian central bank in January approved the EGP as a trade currency, opening the door to the two countries cutting out the USD in bilateral trade. The countries are also exploring swapping goods, allowing Egypt to import Russian wheat in return for exporting oranges, Moselhy said last month.

FOOD SECURITY-

EU food security funds on their way: The Italian Agency for Development andCooperation (AICS) is getting EUR 40 mn from the EU to help the Egyptian ministries of agriculture and supply grow more resilient wheat and upgrade storage capacity, the International Cooperation Ministry said in astatement. This is the first tranche of the EUR 100 mn in funding announced last year from the EU to improve food security in Egypt.

Where’s the money going? Some EUR 25 mn will support the Agriculture Ministry to buy better seeds, while the Supply Ministry will spend the remaining EUR 15 mn to build new siloes and complete the information system geared for controlling the movement of wheat in Egypt, according to the statement. The parties are currently discussing the allocation of the remaining EUR 60 mn.

PUBLIC RELATIONS-

Nominations are open for the Egypt Entrepreneur Awards, with 14 categories now open. You have until 20 April to apply online and can expect to hear about the short list of nominees by May, according to apress release (pdf).

Emerging economies struggle to access international debt markets amid banking crisis. PLUS: Ratings downgrade for Turkey + Record inflation acceleration in Pakistan

Last month’s banking crisis didn’t do any favors for distressed EMs: More than a quarter of EMs are now unable to raise money via the international capital markets as investors shun risky assets amid the recent banking turmoil, the Financial Times reports, citing data by Goldman Sachs. Risk-off sentiment following the collapse of three US banks and Credit Suisse has driven up the spreads between the yields on EM bonds and US treasuries to more than 9 percentage points — the threshold at which market access typically becomes restricted.

Emerging-market local currency debt saw a solid 1Q despite the banking turmoil, notching quarterly returns of 4.8% to outperform US 10-year Treasuries on expectations that a number of EMs are nearing the end of their monetary tightening policy, Reutersreports. “We prefer income in EM debt with central banks closer to turning to cuts than developed markets — even with potential currency risks,” said Jean Boivin, global head of research at BlackRock.

We get a special mention: Egyptian USD-denominated bonds offered some of the worst year-to-date returns during 1Q at a negative 10%, according to Reuters.

Also worth noting:

S&P has downgraded Turkey’s credit rating to negative from stable on the back of post-earthquake reconstruction costs, unchecked inflation, modest FX reserves, and central bank plans to compensate depositors for FX-related losses. (Bloomberg)
Pakistan’s inflation rose at a record pace to 35.4% in March on the back of higher taxes and energy prices. (Bloomberg)

EGX30	16,419	0.0% (YTD: +12.5%)
USD (CBE)	Buy 30.84	Sell 30.96
USD at CIB	Buy 30.85	Sell 30.95
Interest rates CBE	18.25% deposit	19.25% lending
Tadawul	10,590	+0.8% (YTD: +1.1%)
ADX	9,430	-0.5% (YTD: -7.7%)
DFM	3,407	-0.6% (YTD: +2.1%)
S&P 500	4,109	+1.4% (YTD: +7.0%)
FTSE 100	7,632	+0.2% (YTD: +2.4%)
Euro Stoxx 50	4,315	+0.7% (YTD: +13.7%)
Brent crude	USD 79.77	+0.6%
Natural gas (Nymex)	USD 2.22	+5.3%
Gold	USD 1,986.20	-0.6%
BTC	USD 28,532	-0.2% (YTD: +72.5%)

THE CLOSING BELL-

The EGX30 was flat at Thursday’s close on turnover of EGP 1.87 bn. Foreign investors were net sellers. The index is up 12.5% YTD.

In the green: Oriental Weavers (+4.1%), CIB (+2.2%) and Abu Qir Fertilizers (+1.5%).

In the red: Sidi Kerir Petrochemicals (-4.2%), AMOC (-3.5%) and Rameda Pharma (-2.9%).

Egypt, Syria in “advanced talks” to restore diplomatic relations -WSJ

El Sisi could reportedly meet with Syria’s Assad amid apparent rapprochement: The Wall Street Journal is reporting that Egypt and Syria are in “advanced talks to restore full diplomatic relations,” citing sources it says are familiar with the matter. A post-Ramadan meeting between President Abdel Fattah El Sisi and his Syrian counterpart Bashar Al Assad could be in the cards, the sources said, adding that the date and location of any meeting are yet to be confirmed.

Syrian Foreign Minister Faisal Mekdad made his first official visit to Cairo in more than a decade yesterday. Talks between Foreign Minister Sameh Shoukry and Mekdad saw the two agree to strengthen ties, a few weeks after Shoukry visited Damascus, according to separate statements from Egypt and Syria.

The visits come amid accelerating Arab efforts to reestablish diplomatic ties with Syria following its 13-year civil war, which left it a pariah state in the region. An anonymous Egyptian security source said as much yesterday, telling Reuters that the aim of yesterday’s visit was to agree on how the country will rejoin the Arab League with Egyptian and Saudi mediation.

The news got international attention:Al Arabiya | ABC News | Washington Post. .

AND- El Sisi congratulates MBZ on Abu Dhabi’s new crown prince: President Abdel Fattah El Sisi called UAE President Sheikh Mohammed bin Zayed Al Nahyan to congratulate him on his “new leadership appointments” in the UAE, according to an Ittihadiyastatement. MBZ last week appointed his eldest son Sheikh Khaled bin Mohamed bin Zayed Al Nahyan as Abu Dhabi’s crown prince.

CALENDAR

APRIL

April: GAFIto launch the country’s first integrated electronic platform to facilitate setting up a business.

April: SCZone roadshow in China.

April: SCZone to begin providing ship bunkering services in the Suez Canal’s ports.

6 April (Thursday): Al Ansari Financial Services shares to start trading in Dubai.

9 April (Sunday): Senate to reconvene.

10-16 April (Monday-Sunday): IMF / World Bank Spring Meetings, Marrakesh, Morocco.

11 April (Tuesday): Deadline for NGOs to legalize their status.

12 April (Wednesday): National Paints Holding’s and Eagle Chemicals’ MTOs for Pachin ends.

15 April: Lamees El Hadidi’s startup competition show, El Forsa, closes applications.

16 April (Sunday): Coptic Easter

17 April (Monday): Sham El Nessim.

21 April (Friday): Eid El Fitr (TBC).

25 April (Tuesday): Sinai Liberation Day.

27 April (Thursday): National holiday in observance of Sinai Liberation Day (TBC).

30 April (Sunday): Tenth of Ramadan dry port tender deadline.

30 April (Sunday): Deadline for self-employed to register for e-invoicing.

30 April (Sunday): End of Mediterranean, Nile Delta oil + gas exploration tender.

Late April – 15 May: 1Q2023 earnings season.

MAY

1 May (Monday): Labor Day.

2-3 May (Tuesday-Wednesday): Federal Reserve interest rate meeting.

3 May (Wednesday): National Dialogue begins.

4 May (Thursday): National holiday in observance of Labor Day (TBC).

4 May (Thursday): IEF-IGU Ministerial Gas Forum, Cairo.

9-11 May (Tuesday-Thursday): First edition of the Arab Actuarial Conference, Cairo.

12-15 May (Friday-Monday): Egypt Fashion Week.

14 May (Sunday): Expat car import scheme ends.

15 May (Monday): Enterprise Exports & FDI Forum, Four Seasons Hotel Cairo at Nile Plaza.

16-18 May (Tuesday-Thursday): Egypt will host its first conferenceon cybersecurity and defense intelligence systems (CDIS-Egypt).

18 May (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

20-21 May (Saturday-Sunday): eGlob Expo, St. Regis Almasa Hotel, Cairo.

22-26 May (Monday-Friday): Egypt will host the African Development Bank (AfDB) annual meetings in Sharm El Sheikh.

JUNE

7-10 (Wednesday-Saturday): The second edition of Africa Health Excon.

10 June (Saturday): Thanaweya Amma examinations begin.

12 June - 15 July (Monday-Saturday): Thanaweya Amma exams.

13-14 June (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15 June (Thursday): Deadline for bids in EGPC’s mature oil fields tender.

19-21 June (Monday-Wednesday): Egypt Infrastructure and Water Expo debuts at the Egypt International Exhibition Center.

22 June (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

28 June-2 July (Wednesday-Sunday): Eid El Adha (TBC).

30 June (Friday): June 30 Revolution Day.

30 June (Friday): Egypt to exit Grains Trade Convention.

JULY

1 July: House of Representatives deadline to approve the FY 2023-2024 budget.

18 July (Tuesday): Islamic New Year.

20 July (Thursday): National holiday in observance of Islamic New Year (TBC).

23 July (Sunday): Revolution Day.

25-26 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

27 July (Thursday): National holiday in observance of Revolution Day.

Late July-14 August: 2Q2023 earnings season.

AUGUST

August: Hassan Allam Utilities + Agility to open Yanmu East logistics park.

3 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

22-24 August (Tuesday-Thursday): BRICS summit, Johannesburg, South Africa.

SEPTEMBER

9-10 September (Saturday-Sunday): G20 summit, New Delhi, India.

15 September (Friday): IMF to review USD 3 bn program.

19-20 September (Tuesday-Wednesday): Federal Reserve interest rate meeting.

21 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

21-23 September (Thursday-Saturday): Narrative PR Summit, Somabay.

26 September (Tuesday): Prophet Muhammad’s birthday (TBC).

28 September (Thursday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

OCTOBER

2-5 October (Monday-Thursday): ADIPEC 2023, Abu Dhabi National Exhibition Center.

6 October (Friday): Armed Forces Day.

13 October- 20 October (Friday-Friday): The sixth edition of El Gouna Film Festival (GFF).

Late October-14 November: 3Q2023 earnings season.

31 October - 1 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

NOVEMBER

2 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

15-24 November (Wednesday-Friday): Cairo International Film Festival, Cairo.

DECEMBER

12-13 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

21 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

2023: Egypt will host the Asian Infrastructure Investment Bank’s Annual Meeting of the Board of Governors in 2023.

1Q 2023: Egypt + Qatar to launch joint business forum.

1Q 2023: FRA to introduce new rules for short selling.

1Q 2023: Internal trade database to launch.

Summer 2023: EGX to launch a shariah-compliant index.

1H 2023: GAFI roadshow set to launch to drum up foreign investment for golden licenses

1H 2023: Abu Dhabi Islamic Bank intends to launch a digital consumer finance company

2H 2023: Egyptian government expected to sign agreements with a consultant for the EuroAfrica electricity interconnector.

2H 2023: President Abdel Fattah El Sisi and Turkish President Recep Tayyip Erdogan expected to hold a summit.

4Q 2023: EGX to launch its new futures exchange.

End of 2023: A Developments’ first phase of the Lazoghly development completed.

November 2024: Egypt to host the 12th session of the World Urban Forum (WUF12).

2Q 2025: Safaga Terminal 2 to initiate operations.

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