President Abdel Fattah El Sisi spoke about the economy yesterday in his first extended interview of the year with state-owned newspapers. While addressing the investing communities at times in the interview, the president’s intended audience was the average “working man and woman,” whom he thanked for accepting the economic reforms and for whom he expressed sympathy. He promised them that the government will always have their back, saying “we will not allow the greedy to prey on the people.”

On this point, the president outlined what he sees as one of the state’s primary roles in the economy: To provide goods and services to the poor “without being motivated by profit.” The state will ensure that subsidized goods will be available for eligible beneficiaries and monitor prices so they do not get out of control. El Sisi was quick to stress, however, that this does not mean a return of socialism.

Praise for reform program: President El Sisi praised progress on the government’s economic reform agenda, which he described as “crucial” to fixing the “stunted” economy. The president blamed the nation’s longstanding problems on what he called the introduction of a form of unbridled capitalism and an atmosphere that permitted exclusively the seeking profits. That, he said, is what has prompted the introduction of an economic reform agenda. The president also praised the float of the EGP, which he noted had helped attract investment to the country. He included the draft Investment Act as one of the key policies that will strengthen the economy, describing it as a “fundamental shift” in addressing investor’s needs. Ahead of the eurobond roadshow this week, the president said that Egypt has its sovereign debt under control and is measured when seeking loans. El Sisi had this message to investors: You are welcome here, and we will guarantee that your legal and property rights won’t be trampled.

As with most of his interviews on the economy, the president continued to defend the country’s reliance on national projects. He reserved particular praise for the New Administrative Capital and the development of new urban centers as both major sources of revenue for the state and as a means to absorb the population boom. He gave a tally on progress of some of the government’s economic projects including the development of meds and infant formula factories.

On the Armed Forces’ role in the economy, El Sisi told the papers that defense spending from the state budget over the past three years had been next to nothing. The Armed Forces are active in the economy to sustain themselves and minimize their burden on state coffers.

It is definitely the Finance Ministry’s week in the spotlight. We learned yesterday that Egypt expects foreigners to buy as much as USD 10-11 bn of local debt, but, as expected, the eurobond issuance will all begin with a roadshow this week in which Egypt will be looking to raise USD 2-2.5 bn, as reported by Bloomberg. The majority of the eurobonds will come with five- and ten-year maturities but “a small portion” will carry a 30-year tenor. “Getting to [USD 10 bn] will happen gradually and with reassurance that the measures of the economic reform programme are happening gradually and in a sound manner … The more people see that we are achieving good results in our reform programme, the more they will be interested in investing so it is possible, within a year, to reach those levels [of USD 10-11 bn],” El Garhy said. The minister had said he was targeting USD 6 bn in eurobond sales in 2017 and the government will not limit itself to USD-denominated borrowing, but that it could also include yen- and yuan-denominated bonds (so it is a good time to brush up on your knowledge of Samurai and Panda bonds).

Egypt’s budget deficit shrank to 5.1% of GDP in the first half of FY2016-17, registering EGP 174 bn,down from 6.1% of GDP a year earlier, Finance Ministry Amr El Garhy announced at a press conference yesterday, according to a report by Al Masry Al Youm. Revenues grew to 14.5% of GDP, coming in at EGP 220 bn from EGP 192 bn last year. The government also plans to phase out fuel subsidies over the coming five years and is expected to have clear figures for energy and fuel subsidies as part of the IMF agreement, he added, Al Mal reports. On the revenue side, El Garhy expects the executive regulations of the value-added tax (VAT) law to be ready within two weeks, saying tax revenues were affected by the transition from a general sales tax to VAT as taxpayers were given an extra three months to submit their returns.

…El Garhy also announced that Egypt overshot the IMF’s target for the primary deficit, which was 20% lower, according to Al Mal. Overall, the government is targeting a budget deficit of 10.1% of GDP in FY2016-17, down from the 11.5% of GDP recorded at the end of last fiscal year, Al Shorouk says.

Sneak peek at IMF agreement: The minister lifted the veil on a corner of the IMF financing agreement, which will apparently see the state’s payroll outlay fall to 6.8% of GDP from last year’s 7.8% and tax revenue rising to 13.8% of GDP from 12.6% last year, Al Borsa reported. The IMF loan carries a 1.5-1.75% interest rate; each of the three tranches carries a separate 10-year repayment period with a 4.5-year grace period, said El Garhy. The agreement also includes commitments to restructuring fuel and energy subsidies within 3-5 years while simultaneously expanding social protection programs and low income housing, he said — both previously well-known provisions.

However much the learned folks in the House may prefer otherwise, Amr El Garhy didn’t say yesterday he is raising taxes. An AFP story created some confusion on El Face and Tweeter yesterday with a piece on the presser that opened with the lede “Egypt will make further ‘significant’ cuts to energy subsidies, raise taxes and seek more international financing…” The taxes bit also made it into online headlines. The problem: As the story makes clear, El Garhy was making reference to the 1 ppt hike in the value-added tax to 14% in July from the introductory rate of 13%. Not a new tax, folks: That’s exactly how the law was written.

Separately, El Garhy also announced the Finance Ministry will be fixing the customs USD exchange rate throughout February rather than letting the rate move freely each day. He said the rate will be set each month using the reference rate set in previous months, according to Al Borsa. Federation of Egyptian Industries chief Mohamed El Sewedy commended the decision, saying that it will help stabilize commodity prices in the local market, Al Borsa reported.

Disaster averted: An EgyptAir Airbus A300-600 cargo freighter narrowly avoided a mid-air collision with an Air France Airbus A320-200 over Belgium on New Year’s Day. According to The Aviation Herald, the EgyptAir flight MSX-541 was instructed three times to climb and maintain a certain altitude but told to stop as the Air France flight approached. However, the aircraft continued to climb above the specified altitude, putting it on a converging trajectory with the Air France flight, which then had to quickly increase its altitude to avoid a mid-air collision. Belgium’s Air Accident Investigation Unit rated the occurrence a serious incident.

M&A Watch: Solid Capital says it bid for CI Capital stake. Sources at Solid Capital, a newcomer to the industry that has won extensive coverage from Al Borsa and Al Mal, tell the domestic press the outfit has made an EGP 142.5 mn bid to acquire a 15% stake in CI Capital. The same story claims Banque Misr may be providing acquisition finance. Our friends close to the transaction tell us that as of yesterday, they were in receipt of no such bid. The only confirmed bid of which we are aware is the sale and purchase agreement CIB had inked in early December with a group of Egyptian and Gulf investors for 71.94% of CI Capital’s shares for a combined value EGP 683.4 mn. Suggestions Solid Capital was looking to bid first emerged back in December.

M&A watch: Naguib likes mining now. The Naguib Sawiris-backed Endeavour Mining Corporation is studying a merger with Acacia Mining that would create a company with a combined market value of USD 3.8 bn, making up one of the largest precious metal-mining groups in Africa, Bloomberg reports. “Acacia confirms that it is in preliminary discussions regarding a possible combination with Endeavour … A further announcement will be made when appropriate,” the company said in the statement. The agreement could be structured as a reverse takeover, with Acacia acquiring Endeavour and the combined company keeping its London listing, the source added. Combined, the companies would be among the top five African gold miners by market value and ounces produced, according to data compiled by Bloomberg.

What were the best sellers in 2016? Al Borsa has compiled a list of the 10 best-selling cars in 2016. It says the 1.5L Nissan Sunny topped the list at 11,186 vehicles sold, closely followed by the 1.6L Hyundai Verna and the 1.6L Hyundai Tucson. Five of the top 10 vehicles are distributed by publicly traded GB Auto.

Hotels in Cairo, Alexandria to see revenue increases –Colliers: Hotels in Cairo and Alexandria are some of the “hot spots” Colliers International expects to increase their revenue per available room from December 2016 to February 2017, according to Colliers’ MENA Hotel Forecast. Cairo hotels’ average daily rate is set to average USD 143, up 8%, and Alexandria’s USD 66, up 6%, with respective occupancy rate forecasts of 59% and 68% during the three-month period. Colliers says Cairo’s performance has been growing from the low base of 1Q2016 and that profitability levels are set to strengthen. Hotels in Cairo, Alexandria, Sharm El Sheikh, and Hurghada all saw their Guest Experience Index, a measure of guests’ perception of a property’s quality, improve by 2-3% as of November.

Despite the currency shortage and tourism that failed to recover in 2016, the government is on the right track with much-needed reform to push growth towards its potential, CPI Financial writes in what reads like a summary of a research note. Egypt’s fiscal and monetary policy are expected to tighten in 2017, and while “this will no doubt put pressure on growth, though we expect this pressure will be more than offset by an increase in foreign investment, exports and tourism,” NBK said. The float should boost competitiveness of the exports and tourism sectors, while a cheaper EGP will encourage the return of foreign investors. Authorities will be tempted to limit the tightening of fiscal and monetary policy to minimize potential severe short-term economic and social impact. However, the massive fiscal and investment support currently pledged to Egypt by the IMF and others is largely conditional on the progress of reforms.

The Agriculture Ministry has raised the price of subsidized fertilizer to EGP 2,959 per tonne from EGP 2,000, a 48% price hike, Ahram Gate reported. The decision was based on an average FX rate of EGP 16.3 per USD and takes into account increases in production costs. Fertilizer manufacturers had refused to sell to the Agriculture Ministry until prices were adjusted and were instead seeking export sales, Al Mal reported. Evergrow Fertilizers are looking to boost exports to USD 100 mn this year from USD 43 mn in 2016, Chairman Mohamed El Kheshen said. The whole sector added 40% in exports from this time last year, said El Kheshen, who also heads the fertilizer division at the Federation of Egyptian Chambers of Commerce.

Farmers, the beneficiaries of the subsidies, are at an uproar, going so far as to threaten to stop selling wheat to the General Authority for Supply Commodities, Al Mal reports. Growers are also demanding the price of wheat this season be raised, saying the increase in the cost of fertilizers will raise their growing costs 50% in the next harvest.

In related news, the government’s High Committee on Sugar (not to be confused with the sugar high committee) has reportedly agreed to raise the price paid to beet farmers to EGP 400 per tonne from EGP 275 per tonne this season, according to Al Mal. The move is designed to increase domestic supplies of sugar in view of the shortage that gripped the nation late last year.

Wait, is it 2012? Did we just wake up in Morsi-land? A bunch of TV channels (including ONTV and CBC) and a number of media buyers (including Promomedia and MediaLine) have sat down to work together an “purify” the airwaves of “harmful” ad content, Al Borsa. Whether that sentiment is real or this is a sign that a cartel is being built: There are no words.

Shoukry reiterates support for Palestinian cause, two-state solution at Paris summit: Egypt is committed to reaching an inclusive solution to the Israel-Palestine conflict, Foreign Minister Sameh Shoukry said at a Middle East peace conference in Paris, saying Egypt continues to “support the Palestinian people and the Palestinian cause,” Daily News Egypt reports. Al Masry Al Youm has Shoukry’s statement in Arabic. Other delegations present at the summit, which did not include representatives from Palestine or Israel, also “restated their commitment to the two-state solution” and warned both sides against taking “unilateral steps that could jeopardise future negotiations,” according to the BBC.

We’re waiting now for word Turkey is expanding its banana production after the one-time democracy’s parliament voted in favor of a new constitution that gives President Recep Tayyip Erdogan vast powers, BBC reported. Channeling his inner Idi Amin, Erdogan has ensured the document would abolish the post of prime minister, give him power to keep Turkey in an extended state of emergency and allow him the power to “appoint and fire ministers.” A second vote in parliament is due later this week. The proposed constitution will ultimately have to be passed in a referendum.

Meet the best- and worst-performing funds of 2016, per the Financial Times using data from Morningstar. Half of the top 20 losers were health or biotech equities funds, and the biggest losers were a sterling fund and another that made “big bets on a collapse in markets that did not pay off” top the list. An emerging markets fund that lost almost 28% was the third-worst performer. At the head of the class: Funds investing in gold and natural resources, and “five of the top performing funds were Russian equity products.”