New export orders increased for the fourth consecutive month in July and new orders overall have stabilised, ending a 21-month straight decline, according the Markit / Emirates NBD Egypt PMI. Overall, with the PMI reading registering 48.6 in July, the downturn in the health of the economy eased in July and output declined at the slowest pace in 12 months, thereby leading to only a marginal fall in input buying. “Egypt’s economy appears to be stabilizing, with new orders unchanged in July following nearly 2 years of contraction. However, firms saw input costs rise sharply on the back of higher fuel costs as subsidies were cut further at the end of June. Inflationary pressure is likely to remain elevated as higher electricity tariffs came into effect this month,” commented Khatija Haque, Emirates NBD’s head of MENA research. The report also notes that “firms remained optimistic with regards to output growth over the next 12 months. Some companies mentioned hopes of stability in currency markets and economic conditions.”

The Trade and Industry Ministry announced on Thursday that the trade deficit for 1H2017 was nearly halved thanks to falling imports and a modest bump in exports. The ministry says the trade deficit dropped 46% y-o-y to USD 13 bn. This came as imports fell 30% to USD 24 bn compared to the same period last year, Exports, meanwhile, rose 8% to USD 11 bn, Reuters notes. Trade Minister Tarek Kabil says the improvement came after the government’s crackdown on lower-quality imports, replacing imported manufacturing inputs with local ones whenever feasible, and expanding exports. The largest increases in exports came in chemicals and fertilizers, construction materials, and ready-made garments, according to Ahram Gate. The news adds context to a Reuters piece we noted on Thursday that surveyed six importers who said the tonnage they have brought into the country was down 25% compared to last year.

Egypt stands out in this week’s On the Frontiers column in the Wall Street Journal, which features a mini-interview with Birch Reynardson, PM at London-based Somerset Capital. On Omm El Donia, which he says has been “a great contributor” to his portfolio: “They’re executing most of the target structural reforms that they instigated a year ago so they’ve managed to reduce the current account deficit and inflation looks like it’s peaking. So the fundamentals are improving, but it’s still a very vulnerable environment in terms of the lack of positive sentiment on the ground. Growth in the near term is more likely to be driven by industrial-led projects and funded through FDI rather than domestic consumption.”

IPO WATCH- El Garhy Steel Group plans to offer 25% of its shares on the EGX during 1Q2018, Chairman Gamal El Garhy said on Saturday, according to Al Masry Al Youm. The company hopes to raise around EGP 3.6 bn in capital needed for its USD 200 mn pelletizing plant and USD 250 smelting and rolling plants, according to El Garhy. The chairman confirmed that a local investment bank is managing the transaction, but declined to share further details.

IPO WATCH- Misr Italia is moving forward with previously communicated plans to list its shares on the EGX, the company said, according to Al Masry Al Youm, denying reports it plans to postpone the move. Misr Italia had said in April that it is looking to list 20-25% of its shares “sometime in May,” but no news about the listing has emerged since. Beltone Financial has been tapped to manage the IPO.

INVESTMENT WATCH- “Mohamed Alabbar is interested in making a large investment in Al Alamein,” Emaar Properties CEO Mohamed El Dahan told Investment Minister Sahar Nasr and Housing Minister Moustafa Madboulyin a meeting on Saturday. The three explored some of the possible projects available there for Emaar, including development on New Al Alamein. The move is part of a wider push by Alabbar into Egypt, which will include projects in the New Administrative Capital, Cairo, and South Sinai, El Dahan said at the meeting. The Emaar founder had expressed interest in investing in Egypt at a meeting with Nasr last week. Reuters also has the story.

INVESTMENT WATCH- Gold miner Centamin will not invest further in exploration in Egypt if the tender terms offered by the Egyptian Mineral Resources Authority are not changed, CEO Andrew Pardey told Reuters’ Eric Knecht. “If the new bid round they keep talking about comes out with the same terms as the previous one, we will not be participating in it … Under the right terms we would definitely be keen to do more exploration in Egypt given we are established in Egypt and know how it operate,” Pardey says. Knecht notes that it is not clear if the commercial terms for the Golden Triangle area will be similar to the previous tender or would incorporate “a more common royalty and tax arrangement favoured by miners.” Centamin reported lower 2Q2017 profits and output but expects a stronger 2H2017.

INVESTMENT WATCH- A Saudi investor is looking to set up an EGP 2 bn fish farm in Marsa Matrouh’s Al Nageela, a local government official . The project is part of a local development plan, Matrouh Governor Alaa Abou Zaid tells the newspaper. Among the investments he expects in the first phase of the program are a new port and real estate developments.

And speaking of Saudis and fish: Saudi Arabia has temporarily banned imports of certain fish products from Egypt, Al Masry Al Youm reports. Saudi Arabia says its ban is for fears of the tilapia lake virus, following a warning from the UN FAO. Industry professionals say the virus is only harmful to other fish species and that Saudi Arabia is protecting maritime life there, but is not harmful to humans. These statements were echoed by the Agriculture Ministry on Saturday, which also urged UN FAO to conduct further tests to verify their results, according to Al Mal.

MOVES- Cleopatra Hospital Group CEO Ahmed Ezz El Din has been appointed a co-chair of the American Chamber of Commerce in Egypt’s Health and Pharma Committee.

MOVES- Charles Hooper has a third star. The former chief of the Office of Military Cooperation at the US embassy in Cairo was confirmed by the US Senate as a lieutenant general and named director of the Defense Security Cooperation Agency, according to Defense News. DSCA is the Pentagon’s point office on foreign weapon sales. Hooper is expected to take up his new duties on Monday, a spokesman for the Pentagon confirmed.

We officially welcome you to fiscal year 2017-18: President Abdel Fattah El Sisi approved on Thursday the budget for the new fiscal year. Utility prices including water and electricity have already risen since the House of Representatives put its seal of approval on the document about a month ago, and we’ve also seen changes to the food and bread subsidy systems. The hike in water prices should save state coffers some EGP 1 bn, according to the spokesperson for the Water Holding Company. Your VAT counters are now officially set to a 14% baseline rate. You can check the full FY2017-18 budget as published on the Official Gazette here or you can catch a quick refresher on the highlights of the budget here.

Infrastructure development weighs heavily in the budget, with around 60% of all government investments directed towards improving basic infrastructure, Planning Minister Hala El Said said, according to Al Masry Al Youm. The plan includes improving the transportation network nationwide and have the transport sector grow by about 5.8% y-o-y to contribute 5% of GDP, El Said added.

The state budget is going digital: The government is making the switch to a digital budget and linking that electronically to state coffers as of today, Finance Minister Amr El Garhy told the press on Saturday, Ahram reports. The move marks the first step in the government’s plan to make a full switch to electronic transactions by early 2018, which is expected to help the state keep better track of its spending and reduce overall expenditures by as much as 10%.

Budget confirms timeline for 2018 presidential elections: What’s otherwise a throw-away story from Al Masry Al Youm explains that the budget will finance the government’s preparations for mid-2018 presidential elections.

The increase in the central bank’s reserves has been driven by “heavy external borrowing as investors pour money into Egyptian assets,” Bloomberg’s Ahmed Feteha suggests. Praising the increase in the reserve build up, The National's editorial board suggests that a number of challenges remain for the Egyptian economy. The Abu Dhabi-based publication believes that the EGP is “not yet fully convertible” and is not “freely traded against the [USD]” as other currencies. Egypt also faces other economic challenges, including increasingly high rates of poverty and unemployment. They suggest that Egypt needs to increase investments in education and healthcare to “produce more fit graduates” capable of leading the country.

Foreign direct investment in FY2016-17 is expected to ring at around USD 8.7 bn, climbing 26% y-o-y over the previous fiscal year, said Investment and International Cooperation Minister Sahar Nasr (pdf) on Friday. Total investments for FY2016-17 came in at EGP 502 bn, up 28% y-o-y. Nasr reiterated last week’s statements that FDI for FY2017-18 could exceed USD 10 bn.

World Bank, AfDB tranches coming before the end of the year: The World Bank’s board of governors has approved disbursing the third and final USD 1 bn tranche of the its USD 3 bn loan to Egypt, Nasr tells Al Masry Al Youm. The funds should be in by December, Nasr said, adding that Egypt will also be receiving the USD 500 mn tranche of the African Development Bank’s loan before the end of the year.

The foreign press is calling Neymar Jr’s record EUR 222 mn transfer to ParisSaint-Germain a PR coup for embattled Qatar. The transfer of a player of Neymar’s stature from Barcelona — at such a record price — to the Qatari royal family-owned French club signals that business is usual, the Associated Press writes.

Meanwhile, GCC and some Egyptian banks are ratcheting up the pressure on Qatar and are refusing to extend deposits in Qatari banks, Bloomberg reports. Lenders are also struggling to repatriate funds because their counterparts in Qatar aren’t swapping QAR into USD. Banks can either roll over their QAR deposits or convert them into USD in the global market, where they get less favourable exchange rates than Qatar’s pegged official rate.

General Khalifa Haftar, the Libyan military commander backed by Egypt, ordered his air and naval forces to confront any unauthorized vessels in Libyan waters, according to the Washington Post. This comes after the Italian government sent ships to help stem migrant movement to Europe at the request of a rival government faction led by Fayez Serraj, who later denied making the request. Haftar’s faction sees Italy’s presence as a violation of sovereignty and as a push to export the European migrant crisis into Libya. The UN-backed Serraj government met with Haftar’s faction in Paris last week to discuss cooperation.

A little further from home, US President Donald Trump has begun the process to formally withdraw the US from the Paris climate change accord, Bloomberg reports.

Speaking of The Donald: He’s on a 17-day vacation (longer than Barack Obama took in his first year, CNN notes). The US president’s break began as the UN passed sanctions on North Korea advanced by his administration. The measures will cost Pyongyang about USD 1 bn in foreign revenues annually, the Wall Street Journal reports.