Inflation eases to 33.3% in March following EGP float as traders price in lower exchange rate

Monday, 15 Apr 2024

Inflation eases to 33.3% in March following EGP float as traders price in lower exchange rate

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Today at a glance

Economy

Inflation eases to 33.3% in March following EGP float.

Economy

EU greenlights EUR 1 bn in short-term assistance to Egypt.

BUDGET WATCH

Gov’t proposes increasing spending on education, social security, healthcare in FY 2024-25 draft budget.

Economy

Gov’t revenues up 57% y-o-y in 9M FY 2023-24.

Energy

Egypt looks to buy more LNG in the months to come and lease floating regasification unit.

Also on our Radar

South Africa’s Standard Bank Group to set up Egypt office in 2024.

PLANET FINANCE

Faster approvals, simpler structure, and more impact will be hallmarks of World Bank, its chief says.

BLACKBOARD

A deep dive into the demand and supply for second foreign languages in Egypt’s K-12 system.

What We're Tracking Today

EBRD reviewing USD 140 mn loan to finance Actis’ Gabal El Zeit acquisition

Good morning, folks. After an unusually busy Ramadan for local business and economy news, it seems the tempo is set to pick up even further with a raft of new announcements out over the Eid Al Fitr break.

We’ve got plenty to squeeze into today’s issue, so let’s jump right into it.

** DID YOU KNOW that we now cover Saudi Arabia and the UAE?

** Were you forwarded this email? Tap or click here to get your own copy delivered every weekday before 7am Cairo time — without charge.

HAPPENING TODAY-

The IMF and World Bank spring meetings kick off today: Global finance chiefs are in Washington this week for the IMF and World Bank’s annual spring meetings.

ICYMI: Georgieva will begin her second, five-year term as the head of the IMF on 1 October 2024. The IMF’s executive board said she was getting another term thanks to her “strong and agile leadership … navigating a series of major global shocks.”

What to look out for: Finance Minister Mohamed Maait will take the stage tomorrow for a one-on-one conversation with the IMF’s Middle East and Central Asia head Jihad Azour under the title Egypt: Lessons in Restoring Macroeconomic Stability. The IMF will also release its World Economic Outlook and part of its Global Financial Stability report tomorrow and its fiscal monitor on Wednesday.

Go deeper: Check out the full schedule for the gathering here.

Also on Maait’s Washington schedule: Maait will also be attending an annual health financing forum hosted by the World Bank today until Wednesday and the G20 finance ministers’ meeting running this Wednesday and Thursday, according to a statement from the Finance Ministry.

PSA-

The blackouts are back: Rolling blackouts are to resume in Egypt today after the Electricity Ministry put blackouts on pause for 35 days during the month of Ramadan and the Eid vacation, unnamed sources from the ministry told Al Mal. Power cuts will last for an hour each day between 11am and 5pm, the sources added.

WEATHER- It’s feeling pretty summery in Cairo today, with a high of 30°C and a low of 18°C, according to our favorite weather app.

It’s a little cooler in Alexandria, with a high of 25°C and a low of 14°C.

WATCH THIS SPACE-

#1- EBRD mull financing Actis’ acquisition of Gabal El Zeit: The European Bank for Reconstruction and Development is reviewing a proposed USD 140 mn loan for private equity giant Actis to finance its acquisition of the Gabal El Zeit wind farm in the Gulf of Suez, according to a project summary from the lender. The loan is now pending a structure review.

Remember: The Gabal El Zeit wind farm is included in the list of 35 companies and assets earmarked for privatization. Actis has reportedly wrapped up due diligence on the state-owned 580-MW wind farm and is in advanced negotiations with the government, according to unconfirmed local media reports in February.

#2- A digital upgrade for the commercial registry: Local companies will have six months to register and update their commercial activity on a new electronic platform, the Supply Ministry said in a statement on Sunday. An automated assistant that can be contacted via WhatsApp has also been launched to help establishments register on the platform.

#3- Egypt could be present at G7’s June meetings: G7 leaders will gather inmid-June to hold outreach meetings centered on the war in Ukraine, with host Italy planning to extend invitations to several African countries including Egypt, an unnamed source told Reuters.

THE BIG STORY ABROAD-

There’s no single big story abroad this morning, but driving the news for the foreseeable future:

#1- Are we looking at an Iran-Israel war? Egyptian, Saudi, G7, and G20 leaders are all pushing Tel Aviv and Tehran to cool off lest they tip things over into a wider regional conflagration. It’s the singular priority in policymaking circles this morning, as underscored by the banner headline in the Wall Street Journal: Biden wanted to avoid a regional war. Now he’s got one.

Egypt expressed “deep concern” over the attacks, calling on all parties to avoid further instability in the region. Foreign Minister Sameh Shoukry also held telephone conversations with his counterparts from the US, Iran, and Israel in a bid to prevent any further escalation.

Business as usual in Egypt: The Civil Aviation Ministry denied rumors that Egypt will be closing its airspace, explaining that flights continue to operate normally — however, EgyptAir briefly suspended flights to Jordan, Iraq, and Lebanon before resuming them hours later.

The key message to Israel, per Politico: Don’t do something you’ll regret.

#2- The wildcard: How will Netanyahu react? And on what time scale? International leaders will have plenty of forums in which to express “deep concern” this week, with G7 foreign ministers and EU heads of state both set to meet on Wednesday and G20 finance ministers meeting on Thursday.

Also “top of mind” as we keep shrugging off the post-Eid blues:

Not enough news in the pipeline for you? The halving of BTC should take place sometime around Saturday, Donald Trump’s criminal hush-money trial gets underway today in New York City, and India kicks off its 44-day parliamentary election process on Friday.

*** It’s Blackboard day: We have our weekly look at the business of education in Egypt, from pre-K through the highest reaches of higher ed.

In today’s issue: We dive into the demand and supply for second foreign languages in Egypt’sK-12 system.

Tags:

Actis Gabal El Zeit wind farm renewables What We're Tracking Today

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Economy

Egypt’s inflation eases to 33.3% in March following float of the EGP

Inflation cools post float as traders price in lower exchange rate: Egypt’s annual urban inflation cooled to 33.3% in March, down from 35.7% in February on the back of a softer increase in food prices as traders price in a lower exchange rate, according to figures from state statistics agency Capmas.

This was our first proper look at what the float means for prices: Analysts were split on the impact floating the EGP would have on inflationary pressures. While some analysts predicted that the depreciation of the EGP in the banking system and fuel price hikes would send inflation soaring, a second camp that argued that prices were based on the EGP’s exchange rate in the now defunct parallel market seem to have been proven correct. Now that the EGP is trading in banks for considerably less than on the parallel market before the float, inflationary pressures have begun to ease as traders price in a stronger EGP.

Monthly inflation fell to a six-month low: Monthly headline inflation fell to 1.0%, its lowest rate since October, after reaching its highest recorded m-o-m jump of 11.4% in February.

Core inflation falls: Annual core inflation — which excludes volatile items such as food and fuel — slowed to 33.7% in March, down from 35.1% in February, according to central bank figures. Meanwhile, monthly core inflation fell to 1.4%, down from 6.1% in February.

You can thank food and beverage prices: Food and beverage prices — the largest component of the basket of goods and services used to calculate headline inflation — continued to rise but at a rate of 45.0% y-o-y compared to 50.9% in February. Prices increased by 0.7% m-o-m in March, compared to 16.7% m-o-m in February.

ICYMI: The central bank made it crystal clear when it floated the currency last month that the country will “continue the transition to a flexible inflation targeting regime … and continue to target inflation as its nominal anchor.” This has been a long-held directive from the IMF during its loan negotiations with the government.

WHAT HAPPENS NEXT-

Prices are expected to keep falling after the Madbouly government directed local manufacturers, suppliers, and retailers to slash commodity prices by up to 30% by the end of Eid Al Fitr. The only way to break the inflationary cycle is to introduce price cuts for major commodities that are proportional to the decline of the USD-EGP exchange rate on the parallel market, Prime Minister Moustafa Madbouly said.

But inflation will likely stay elevated despite slowing in March, as “the effects of the currency fall will continue to feed through over the coming months and keep inflation elevated throughout the rest of 2024,” Capital Economics’ MENA economist James Swanston wrote in a note picked up by Zawya. Inflation will remain above 25% at the close of the year driven by the EGP’s depreciation and price hikes, he added.

Other signs pointing to inflationary pressures persisting include the newly-introduced minimum wage hike for private sector workers and the prospect of further subsidy cuts, HSBC economist Simon Williams said in a note.

Tags:

CAPMAS devaluation economy foreign exchange inflation

Economy

EU approves EUR 1 bn in short-term assistance to Egypt

EU greenlights the first of our funds: The European Council has approved releasing EUR 1 bn in short-term financial assistance as the first tranche of a EUR 5 bn package of concessional loans to provide macro-financial assistance agreed to in March, the bloc said over the weekend in a press release. The EU is looking to deliver the first tranche before next summer, EU Ambassador to Cairo Christian Berger said last month.

Conditions apply: “A precondition for granting the assistance is that Egypt continues to make concrete and credible steps towards respecting effective democratic mechanisms (including a multi-party parliamentary system) and the rule of law and guaranteeing respect for human rights,” the council said without elaborating any further.

Remember: The EU announced that it will provide Egypt with a EUR 7.4 bn package of loans, grants, and investments through 2027, after the two sides signed a joint strategic and comprehensive partnership in March.

Expedited delivery: The EU will deliver the short-term funds by applying an emergency funding mechanism that side-steps the EU Parliament’s approval as well as an evaluation of the funding’s effects, a letter penned by European Commission President Ursula von der Leyen to the parliament last month said. The plan is part of the bloc’s efforts to “make sure that a first significant contribution” reaches Egypt before the end of 2024.

Why the rush? While it’s unusual for the bloc to bypass financing safeguards, European Parliament elections scheduled for 6-9 June mean that upholding these controls would slow the delivery of funds. In her letter Von der Leyen cautioned of a “rapidly deteriorating economic and fiscal situation” triggered by “a very large exposure to the economic effects of Russia ’s full-scale war of aggression on Ukraine, the wars in Gaza and Sudan, and the Houthi attacks in the Red Sea.”

It’s not without controversy: Fast tracking the package bypasses the oversight of the EU Parliament and does away with the need for impact assessments. Following the EU elections, the EU parliament will be “fully involved” with the remaining EUR 4 bn of macro-financial assistance that will be given out after Egypt commits to “more comprehensive” reforms, Von der Leyen added.

Tags:

economy EU Ursula von der Leyen

BUDGET WATCH

Gov’t proposes increasing spending on education, social security, healthcare in FY 2024-25 draft budget

The Finance Ministry unveiled its draft budget for the coming fiscal year, which willsee the government spend more money on education, healthcare, social protection, and food and petrol subsidies, according to the statements from the ministry (here and here).

#1- Education is getting a boost: The government allocated EGP 858 bn to the educationsector in the next fiscal year’s draft budget, up 45% y-o-y. Funding directed towards scientific research will also increase 40% y-o-y to just under EGP 140 bn.

#2- Healthcare will see a nearly 25% increase in the draft budget, with EGP 496 bnallocated to the sector — of which, over 8 bn will go to health ins. (up 38% y-o-y) and EGP 10 bn to state-funded treatments (up 25% y-o-y).

#3- Social protection is set for a 20% increase, with EGP 636 bn earmarked in the comingfiscal year’s draft budget.

Remember: Healthcare and education were among the key targets under the government’s economic and social development plan for the next fiscal year. The government wants to hire some 150k school teachers, build more technological universities, and push for the accreditation of public universities. It also wants to increase the private sector’s share in healthcare to 50% by 2027 — up from a current 30%. Educators, doctors and nurses also saw their wages increase and pensioners received a 15% increase in their payouts as part of a recent package of social protection measures.

Other key takeaways from the draft budget include:

EGP 134 bn earmarked to subsidize basic commodities, up 5% y-o-y.
EGP 155 bn earmarked for petrol subsidies, up 30% y-o-y.
EGP 12 bn allocated to back social housing initiatives, up 17% y-o-y.
EGP 23 bn allocated to support export activities.
EGP 18 bn allocated to back the rebooted subsidized loan program for industry and agriculture, which offers credit facilities to manufacturers at an interest rate of 15%.

Tags:

budget watch commodities economy Education Finance Ministry healthcare insurance Madbouly Cabinet Mohamed Maait Ras El Hekma social welfare state budget

Economy

Egyptian government revenues up 57% y-o-y in 9M FY 2023-24 to EGP 1.5 tn

Budget indicators exceeded targets during the first nine months of the fiscal year on the back of economic reforms that pushed the private sector’s role to the forefront and helped attract more local and foreign investments, Finance Minister Mohamed Maait said in a statement.

Revenues were up 57% y-o-y, reaching EGP 1.5 tn between July and March. Excluding the Ras El Hekma agreement, revenues were up 38%. While tax revenues were up 41% to over EGP 1 tn, non-tax revenues registered a 123% increase during the same period.

But, the budget deficit remained virtually unchanged y-o-y at5.4% of GDP, with government expenditure increasing nearly 51% y-o-y to EGP 2.3 tn, on the back of high interest rates and debt servicing bills, as well as increased spending on social security measures and multiple wage hikes.

A primary surplus of 3% of the GDP was achieved, logging EGP 416 bn — EGP 179 bn of which came from the landmark Ras El Hekma development agreement — which is more than eight times higher than last year’s primary surplus, according to the statement. During the same period in the last fiscal year, the primary surplus of around EGP 50 bn accounted for only 0.5% of GDP.

Speaking of debts: Maait said the government eyes bringing down debt servicing bills to 30%of government spending in the medium term, as part of a wider plan to reduce the state’s debt-to-GDP ratio to 80% by 2027. The government said last month it sees the ratio narrowing to below 90% in the next fiscal year.

Tags:

budget deficit economy Finance Ministry state budget

Energy

Egypt looks to buy more LNG in the months to come and lease floating regasification unit from BW Energy

Egypt is looking to buy more LNG: The state gas firm EGAS is looking to import no less than one LNG shipment a month until July or August in efforts to prevent a repeat of last year’s rolling blackouts, Bloomberg reports, citing people it says have knowledge of the matter. The country will need no less than five such shipments for the summer, one source is quoted as saying. The government has purchased at least two shipments of LNG to be delivered next month, an Oil Ministry source told us last week

And the gov’t is already in talks to lease a floating regasification unit from Norway’s BW Energy for five years, an unnamed source told Al Borsa. The proposed regasification unit that will dock in Ain Sokhna will do away with the country’s reliance on Jordan’s terminal in Aqaba and be the first in the country since the government ended a contract with Norway’s Höegh Gallant in 2018.

ICYMI: The power outages are set to make their comeback today now that the Eid Al Fitr break is over. Lights are expected to go out for two hours a day, a source at the electricity sector told Enterprise earlier this month.

But, it will get more difficult for us to secure LNG shipments on the back of growing seasonal demand from South America — where winter starts in June. Increasing demand paired with Egypt’s absence from the LNG market means a tightening LNG market and may put Egypt in a position where it will have to “scramble for shipments in the coming months,” Bloomberg reported.

The solution? “In the long run, Egypt will need to increase its exploration efforts to boost production and bet on renewable energy,” International Crisis Group’s North Africa project director Riccardo Fabiani told Bloomberg.

Tags:

energy oil and gas

A MESSAGE FROM HSBC

Taking a long-term view: Why prospects for the Gulf-Asia trade and investment corridor remain strong

The trade flows that link the Gulf to Asia along the so-called Silk Road are ancient, but today there is renewed focus on this linkage as goods-carrying ships in the Middle East bound for Asia face disruption and being re-routed as they pass through the Suez Canal and the Red Sea.

The complex diplomacy and geopolitics underlying these realities affect governments around the globe, which has led to some revising their optimism about the future of the Gulf-Asia trade and investment corridor.

And yet, the longer term trends and commitments to opening up a new silk road are not changing. Ambitious diversification plans among Gulf economies remain unchanged, and will require connectivity to high growth markets in the Asia-Pacific. The push away from hydrocarbons for example is driving governments, investors, and companies on both ends of the corridor to invest — and seek investment — in new technology and infrastructure.

Capital rich countries in the Gulf increasingly seek investment diversification away from traditional centers and South Asian nations have exciting consumer stories and young workforces to offer in exchange. The Asian region offers better GDP growth potential than the West, contributing over 60% of global GDP in 2023. The ASEAN-6 — comprising Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam — are forecast to grow by 4.7% in 2024, far outstripping the 1.1% expansion expected in the developed world in 2024. Asia is also a growing center in the supply chain for the transition economy.

Accordingly, GCC trade with emerging Asia will reach USD 578 bn annually by 2030, surpassing trade with advanced economies.

Momentum for trade and investment agreements that aim to accelerate these trends has been growing for some time. Indonesia and the UAE signed a Comprehensive Economic Partnership Agreement in 2022, which aims to increase bilateral trade from USD 3 bn in 2021 to USD 10 bn by 2027. Since December 2021, Malaysia and Saudi Arabia have signed agreements on 18 industrial projects, with investments totaling nearly USD 1.7 bn and projected to create around 2,560 jobs.

Japan is also cementing ties with the Gulf states. Prime Minister Fumio Kishida signed an agreement in Saudi Arabia in July 2023 to cooperate on rare-earth metals and clean hydrogen. Given Japan’s strong business ties with ASEAN, there are also numerous chances to strike partnerships combining Japanese expertise and capital, and that of the Gulf, with leading local players.

The India-Middle East-Europe Economic Corridor could be another long-term driver of activity between the regions. Six months on from its announcement, consideration is understandably turning to the likely logistical and geopolitical challenges of making such a grand plan a reality. But there is good financial and political capital behind the project. Saudi Arabia has committed USD 20 bn to its success. US president Joe Biden called it a “game-changer.” If even some of the potential of the initiative is realized — it could lead to a 40% increase in trade speed through the corridor — it could support a significant uplift in activity between Asia, the Gulf, and Europe.

Gulf sovereign wealth funds have been making tangible steps to seize the chance too. The Abu Dhabi Investment Authority has been a major investor in Indonesian ride-hailing and e-commerce group GoTo since before its 2022 IPO. The emirate’s renewable power company Masdar also made a strategic investment in Indonesian Pertamina Geothermal Energy’s IPO. Mubadala sought exposure to Asian demographics with its investment in India’s Cube Highways Trust, and has now doubled down on the region with the formal opening of a Beijing office. Meanwhile, Saudi Arabia’s Public Investment Fund (PIF) plans to build on the 2022 opening of its Hong Kong office with a larger presence in mainland China.

Direct cooperation between both regions’ sovereign wealth funds is further driving the chance for increased flows through the corridor. The UAE has committed USD 20 bn to the newly established Indonesian Investment Authority, and the forthcoming Maharlika Investment Fund in the Philippines is drawing the attention of the Gulf’s more established counterparts. Both funds take a catalytic role, seeking to attract co-investment into their countries in infrastructure and other key areas. That’s a natural alignment for Gulf money — long-term, reliable in distribution, and anchored to demographics that are attractive even compared to growing home economies.

Other structures, such as a Middle East-China cooperation fund jointly established by the city of Shenzhen and Saudi Arabia’s PIF to stimulate post-pandemic growth, are taking targeted approaches, with similar initiatives involving other mainland Chinese cities, and potentially other sovereign funds, expected to follow.

It is far from one-way traffic. A growing investor base in Asia is increasingly seeking access to potential investments in the Gulf. A mark of this was the launch in November 2023 of Asia’s first ETF tracking the performance of Saudi Arabian equities. The Hong Kong listing attracted over USD 1 bn in assets under management at launch. We also believe that Japanese companies will be welcome partners to invest in the Gulf, bringing international experience and industrial expertise.

The net zero transition will be a huge catalyst of activity through the new silk road. Enormous renewable energy and infrastructure development projects across the Gulf are opening the door for Asia-based contractors, and for the export of emission reducing technologies. For example, Saudi Arabia’s ACWA Power signed agreements with nine Chinese entities in 2022, laying the ground for financing, investment, and construction of ACWA Power’s global clean and renewable energy projects.

Transition-focused international agreements also inevitably relate to the high population, high growth, higher emitting markets along this corridor. At COP28 in December, the UAE announced the launch of its Global Climate Finance Centre. Based in Abu Dhabi, it will support local and international players in unlocking capital for transition in markets laying largely along the Silk Road. COP28 also saw the launch of the Capacity-Building Alliance of Sustainable Investment, focused on addressing the bottleneck in emerging and developing markets around technical capacity to access private and public capital for the transition.

When delegates met at HSBC’s inaugural Global Investment Summit in Hong Kong on 8April, they discussed how these types of new networks are changing the global economy. Making precise predictions might be ill-advised, but the deep and growing connectivity between Asia and the Gulf, backed by active diplomacy, cooperation, and investment is too compelling, and makes too much sense to be derailed. It suggests the beginning of a generational shift that will have far-ranging implications for international trade, business, and societies.

Greg Guyett is CEO of HSBC Global Banking & Markets. This Message from HSBC was originally published in Nikkei Asia.

Tags:

A MESSAGE FROM HSBC HSBC logistics trade

Also on our Radar

South Africa’s Standard Bank Group to set up Egypt office in 2024. PLUS: BP projects float impact, EBRD funds SMEs, Eastern hikes smoke prices, Arabia Hotels builds new Giza Pyramids hotel

BANKING-

Standard Bank to set up new Egypt office: Africa’s largest lender by assets Standard Bank Group will set up a new representative office in Egypt by the end of the year, head of the bank’s MENA operations Rassem Zok told Bloomberg. The South African bank’s presence in Egypt will allow the bank “to capitalize on the significant emergence of the Gulf-sub Sahara Africa-Egypt corridors,” Zok said.

ENERGY-

BP feels the squeeze post float: Global energy giant BP is expecting an “adverse impact” of around USD 200 mn in 1Q 2024 as a result of the float of EGP, it said in a statement.

SMEs-

EBRD ups funding for SMEs: The European Bank for Reconstruction and Development (EBRD) will provide MNT-Halan microfinance subsidiary Tasaheel Finance with EGP 700 mn to on-lend to women-run SMEs in Egypt, according to a project summary from the bank. The loan comes as part of the EBRD’s Women in Business program, which works to “provide access to finance through credit lines to local banks dedicated to women-led SMEs,” according to the initiative’s website.

TOBACCO-

Eastern Company hikes the price of smokes for the second time this year: State-owned tobacco giant Eastern Company has raised the prices of cigarettes by an average of 12%, Eastern CEO Hany Aman told Al Hadath Al Youm (watch, runtime: 2:14) yesterday evening. The price of a pack of Cleopatra increased 15% to EGP 34.5, while the cost of its higher-end Viceroy and Pall Mall packs increased 10% to EGP 55. Aman pointed to the EGP depreciating in the banking system following the float of the EGP pushing up the costs of imported raw materials used by Eastern to produce cigarettes.

HOSPITALITY-

A new hotel incoming: Arabia Group subsidiary Arabia Hotels has kicked off construction of its USD 220 mn Fairmont Sun Capital Hotel overlooking the Giza Pyramids, the company said in a press release (pdf). The project will add 500 rooms to Egypt’s hotel capacity and will open its doors in 2028.

COMMODITIES-

One of the two grain ships held up in Russia sets sail: Wadi Safaga — one of the two Egyptian ships loaded with Russian wheat that had been denied permission to set sail by Russian authorities last week — set sail for Egypt on Friday, writes Bloomberg, citing sources it says have knowledge of the matter. The resolution came after the Egyptian Foreign Ministry reached out to its Russian counterparts to sort out a documentation error.

Tags:

ALSO ON OUR RADAR banking BP commodities Eastern Tobacco EBRD hospitality SMEs Tasaheel tobacco

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PLANET FINANCE

Faster approvals, simpler structure, and more impact will be hallmarks of World Bank, its chief says

World Bank Group President Ajay Banga kicked off the IMF and World Bank Group’s spring meetings last Thursday with a press conference at which he talked about challenges facing the global economy and how the group plans to expand its role in addressing them (watch, runtime: 34:26).

G20 wants the WB Group to play a larger role on the global scale: Banga touched on some of the most-talked-about global issues including climate change, food insecurity, pandemics, poverty, and scarce resources, saying that “G20 leaders challenged the World Bank Group to change and to be a bigger part of the solution,” with the bloc providing a roadmap of 27 recommendation for the group to boost the speed and simplicity of its processes, “leveraging our [the group’s] balance sheet, engaging partners and the private sector.

More bucks for more bang: The group has liberated USD 40 bn over the past 10 years from its balance sheet by adjusting its loan to equity ratio to be able to take part in more projects with bigger investments. The group plans to use some of its tools including the portfolio guarantee mechanism, and the hybrid capital instrument “ to leverage every USD we receive, six to eight times over the coming decade,” Banga explained.

A new fund for cross-border projects: Earlier this month, the group “began offering 50-year financing through IBRD at no additional cost for projects that provide cross-border benefits,” said Banga, adding that the group has launched a “Livable Planet Fund that can be funded by governments, but also by philanthropies,” to finance these new incentives. “All these instruments, what they do is they help us support the ambitions of middle-income countries, but we must do all we can to lift up lower-income countries,” he highlighted.

Mobilizing funds for lower-income countries: The IDA replenishment is coming up at the end of 2024 and the group is aiming to pool together generous funds to refill the association’s coffers. “IDA is the largest source of concessional financing for lower-income countries,” said Banga.

Data openness to encourage private investment in developing economies: “Last month, we started to publish our proprietary data as a global public good to kind of inspire investor confidence,” said Banga, explaining that the group started by publishing private sector data by country income level, private sector default data categorized by credit rating, and sovereign default and recovery rate statistics dating back to 1985.

THE MARKETS THIS MORNING-

Holding steady? Traders around the world seem to be taking Iran’s missile and drone attack on Israel — unprecedented though it may be — with a grain of salt:

US stock futures ticked up overnight and European futures inched down ever so slightly. All three major US indexes closed down last week;
Gold and oil prices — both on an upward march of late, with gold having hit another all-time high last week — pulled back slightly yesterday;
The USD is holding steady and BTC strengthened overnight.

HAPPENING NOW- Major Asian benchmarks are down across the board this morning. The Shanghai Composite is taking it in stride, off 0.3% in early trading, while the Hang Seng, Kospi, and Nikkei are all down 1.1-1.3%

EGX30	28,504	+1.3% (YTD: +14.5%)
USD (CBE)	Buy 47.52	Sell 47.66
USD (CIB)	Buy 47.50	Sell 46.60
Interest rates (CBE)	27.25% deposit	28.25% lending
Tadawul	12,667	-0.3% (YTD: +5.9%)
ADX	9,237	0.0% (YTD: -3.6%)
DFM	4,244	-0.1% (YTD: +4.5%)
S&P 500	5,123	-1.5% (YTD: +7.4%)
FTSE 100	7,996	+0.9% (YTD: +3.4%)
Euro Stoxx 50	4,955	-0.2% (YTD: +9.6%)
Brent crude	USD 90.45	+0.8%
Natural gas (Nymex)	USD 1.77	+0.3%
Gold	USD 2,374.70	+0.1%
BTC	USD 64,251.30	+1.9% (YTD: +50.8%)

THE CLOSING BELL-

The EGX30 closed with a 1.3% gain last Monday on turnover of EGP 2.3 bn (53.9% above the 90-day average). Local investors were net buyers. The index is up 14.5% YTD.

In the green: Alexandria Containers and Cargo Handling (+12.0%), Juhayna (+4.6%), and Ibnsina Pharma (+4.4%).

In the red: Qalaa Holdings (-0.4%), GB Corp (-0.3%), and Fawry (-0.1%).

Tags:

cryptocurrency Financial Markets Planet Finance World Bank

Our weekly deep dive into education in Egypt, from K-12 to post-secondary.

Published every Monday in EnterpriseAM.

Read Blackboard

BLACKBOARD

A deep dive into the demand and supply for second foreign languages in Egypt’s K-12 system

One foreign language isn’t enough: While English has been the most widely used foreign language in Egypt since the beginning of the twentieth century, the use of second foreign languages has been picking up in recent years amid an increasingly globalized job market. Capitalizing on the demand for foreign languages, private schools have been pouring more resources into deepening their offerings. And eager to catch up, public schools will next year begin rolling out new languages to students at a younger age. But first, what shapes the demand and supply for foreign languages in Egypt?

It all boils down to personal preference: Parents’ choices for what language they choose for their kids tend to be guided by their dispositions towards the job market, said Abeer Ahmed, founder of the Egyptian Mothers Union for the Advancement of Education. For families interested in technical fields, German programs and applied technology schools that offer Chinese and Korean can be attractive options, seeing as these languages are increasingly in demand within those fields. Conversely, for those drawn to the humanities, French, Spanish, and Italian remain popular options, she explained.

German is the second foreign language of choice for 70% of students in most private and international schools, while French comes in second, Private School Owners Association Deputy Chairman Badawy Allam told Enterprise. German has become increasingly popular over the past two years, he said, with many students who had initially opted for French switching to German in schools where that is allowed.

But why? Of the ten parents we surveyed, four said they chose German for their children because of its grammatical ease and similarities to English, while three others opted for French because of their own familiarity with it. The remaining three said their choices were based on their children’s requests.

The trend is more apparent at the elementary level: Throughout grades one to six, 80% of students study German at Future Leaders Language Schools, its chairman Ahmed El Khateeb, told us.

Why German? The strong demand for German can be attributed to its perceived ease compared to other languages as well as its role in helping students secure jobs at home and abroad, Allam said. German programs usually focus on technology education, which comes in handy for students who want to pursue a career in the sector, he explained.

French could see a resurgence in the coming years on the back of Egypt's growing efforts to strengthen ties and economic relations with the rest of Africa where the language remains prominent, said Teachers Syndicate head Khalaf El Zanaty. While French is eclipsed by German and other languages in Cairo, it remains the top choice across other governorates, he added.

But are schools equipped to handle the surge in demand for foreign languages? Private and international schools invest heavily in capacity building to keep pace with competition, British International College of Cairo CEO Ahmed Samir said. These schools work to attract competent language instructors and provide them with training — an approach that serves as a marketing strategy that helps attract students.

The public sector is lagging behind: Public schools have been facing a severe shortage of teachers in general, and language instructors in particular, on the back of low teacher salaries, both El Khateeb and El Zanaty said. The shortage is further compounded by a high retirement rate and a lack of replacements, El Zanaty said. Meanwhile, teacher training is scarce and language labs are neglected, he said, suggesting that addressing these issues would greatly improve the overall quality of education.

Gov’t plans to step up its game next year: Public schools are set to offer elective second foreign languages to students starting grade seven — rather than grade 10 currently — starting from the academic year 2024-2025. Students will have the choice between Italian, German, and French and must study their language of choice throughout middle and high school. The plan is to equip students with a strong foundation in their chosen language by the time they graduate, a source at the Education Ministry told Enterprise. The three languages were chosen — after careful consideration with educational experts — based on the Common European Framework of Reference for Languages as well as their relevance to the job market until 2050, the source added.

Russian could also be on the table: Russia’s Education Ministry said in March of last year that it had reached an agreement with its Egyptian counterpart to offer Russian as a second language at Egyptian schools and universities.

The gov’t is already building up the workforce for it: Some 16k new teachers — of which a large portion are instructors of German, French, and Italian — have been appointed at public schools for the next academic year, according to our ministry source. The ministry is training these teachers in partnership with the German Goethe Institute and other foreign cultural centers, the source added.

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CALENDAR

2024

APRIL

15-21 April (Monday-Sunday): The IMF / World Bank Spring Meetings.

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

26 April (Wednesday): Clocks move forward one hour at midnight as daylight saving time starts.

28 April (Sunday): Grace period to ins. brokerage firms to comply with Law 215 for 2023 expires.

28-29 April (Sunday-Monday): Saudi Arabia hosts a World Economic Forum (WEF) meeting on ‘global collaboration, growth, and energy.’

29 April (Monday): The government’s car export scheme expires.

MAY

1 May (Wednesday): National holiday in observance of Labor Day (TBC) (national holiday).

2-5 May (Thursday-Sunday): Townhall Expo in Riyadh.

5 May (Sunday): Coptic Easter.

6 May (Monday): Sham El Nessim (national holiday).

20 May (Monday): Malaysian Palm Oil Forum in Cairo, with attendance from Malaysian Plantation and Commodities Minister Johari Abdul Ghani.

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

29 May (Wednesday): Virtual launch of Chicago Booth Executive Program.

JUNE

15-19 June (Saturday-Wednesday): Eid El Adha (TBC) (national holiday).

29-30 June (Saturday-Sunday): EU-Egypt Investment Conference.

30 June (Sunday): June 30 Revolution Day (national holiday).

JULY

7 July (Sunday): National holiday in observance of Islamic New Year (TBC).

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

23 July (Tuesday): Revolution Day (national holiday).

SEPTEMBER

2-5 September (Monday-Thursday): Egypt International Airshow, El Alamein International Airport.

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

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

25-26 September (Wednesday - Thursday): The Asian Infrastructure Investment Bank’s (AIIB) 2024 annual meeting, Samarkand, Uzbekistan.

OCTOBER

6 October (Sunday): Armed Forces Day.

17 October (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

21-27 October (Monday-Sunday): The World Bank and IMF annual meetings.

NOVEMBER

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

DECEMBER

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

EVENTS WITH NO SET DATE

April 2024: President Abdel Fattah El Sisi will visit Turkey.

1Q 2024: Egyptian-Qatari Joint Supreme Committee.

1Q 2024: Opening of the newly developed Pyramids Plateau in Giza.

1Q 2024: The government is set to finalize the sale of the Gabal El Zeit wind farm.

February-May: The Grand Egyptian Museum could officially open to visitors.

March 2024: The USD 2.7 bn MIDOR Refinery is set to begin full operations.

May 2024: Egypt to receive USD 20 bn of Ras El Hekma funds.

May 2024: Arab Finance Ministers’ meeting at Egypt’s administrative capital.

June 2024: Gov’t expects to finalize sale of Beni Suef combined-cycle power plant.

1H 2024: Gov’t expects to finalize sale of four water desalination plants.

2H 2024: Gov’t to launch the Cairo Ring Road BRT buses.

November 2024: Egypt to host the World Urban Forum (WUF12).

End of 2024: The launch of the high-speed train line linking Ain Sokhna with Al Alamein City.

2025

EVENTS WITH NO SET DATE

2Q 2025: Safaga Terminal 2 to start operations.

2027

20 January-7 February: Egypt to host the African Games

EVENTS WITH NO SET DATE

End of 2027: Trial operations at the Dabaa nuclear power plant expected to take place.

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