It’s morning again in Egypt as officials float currency, sign up for IMF program

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It’s morning again in Egypt: Sentiment can turn on a dime, and that’s what happened yesterday

It’s morning again in Egypt — we mean that literally, but also figuratively, in the same way that (forgive us the analogy) Ronald Reagan’s campaign team meant it with its famous 1984 campaign ad. Simply put:

Yesterday’s bold policy moves and clear statements by officials leave us more optimistic about the economy’s direction of travel than we have been in four very long years. Remember the “Dragon Storm” that portended the start of covid-19 and, with it, the crisis from which we now seem to be emerging? The four-year anniversary is in just five days’ time.

Central Bank Governor Hassan Abdalla spoke for us all when he said yesterday that having two exchange rates is a “disease that throws things out of balance” and that much of what we’ve seen in the past four years has reflected a “lack of confidence” in the EGP (watch, runtime 12:27).

Yesterday’s moves were exactly what the doctor ordered, suggesting policymakers are serious about restoring confidence. We have avoided the scenario many had feared: That the Ras El Hekma investment would provide short-term cover for policy inaction.

It is too early for unbridled optimism, but after a long period of slumber, we took explosive steps out of the starting blocks yesterday. The big challenge for all of us now — whether we’re leading companies or governments — is to deliver policy stability while remaining flexible in the face of outside shocks.

But you know what? It’s okay to feel good this morning.

^^ We have the full rundown on everything in this morning’s news well, below.

BUT FIRST- Here’s the recap of what went down and how many in our community are feeling now:

#1- The Central Bank of Egypt’s decision to allow the EGP to float was the key that unlocked it all. And if it (so far) feels real, that’s because it is, senior bankers, government officials, and diplomats tell us. After a period of bid-and-ask price discovery throughout the morning yesterday, banks bought and sold real volumes on the interbank market in the afternoon.

#2- A jumbo-sized, 600 bps interest rate hike and the rollout of new, high-interest CDs to sop up liquidity are probably just what the doctor ordered. A senior Finance Ministry official tells us that a 30% or higher return on t-bills is squarely in the range that they’ve been told by foreign institutions would bring them back. The CEO at one of the nation’s most visible private-sector banks tells us they bought USD from investors outside Egypt yesterday.

The key now: How quickly can we move to a series of rate cuts that will bring borrowing costs under control for the government and corporates alike.

WATCH THIS SPACE- The central bank will sell EGP 110 bn worth of t-bills between today and Sunday.

#3- The IMF handed us a lifeline that could be worth as much as USD 9.2 bn, including USD 8 bn in an extended fund facility covered under the staff-level agreement inked yesterday and, possibly, another USD 1-1.2 bn in climate finance from the lender — talks on the latter are still in progress.

More important are the policy reforms for which we’ve signed up as a condition of the agreement, which brings us to:

#4- The IMF is going to be watching closely to make sure we stay the course, saying it will be monitoring our “move to a flexible exchange rate system, tightening of monetary and fiscal policies, and a slowdown in infrastructure spending” all with a view to “reducing inflation, and preserve debt sustainability, while fostering an environment that enables private sector activity.” We hope they’re vocal and public if they see signs of deviation.

#5- There are very clear statements from officials including Prime Minister Moustafa Madbouly, Abdalla, and Finance Minister Mohamed Maait that officials know we went off-track — and that we’re committed to setting things right. The drumbeat will continue today: Maait has briefed G7 ambassadors and sought their support and will appear this afternoon at the American Chamber of Commerce in Egypt. He’s also planning to make the rounds of other business associations and international chambers to talk about where we go from here.

#6- Importers of essential goods are getting allocations that are allowing them to move goods out of ports. Food and medicine are at the top of the list, we’re told, but the hope is that folks with production inputs in port are next. The emphasis at one of the nation’s largest banks, we’re told, will be to “allocate as much as possible to as many clients as possible to make it clear: There’s money moving into the system.”

#7- Credit card restrictions are easing after the central bank left it to each lender’s discretion how fast they let go of controls imposed over the past four years of crisis.

#8- Foreign appetite for Egypt is starting to return. Investors in the UAE yesterday had more appetite for the Egypt story than at any time in the past four years. True, that’s not a high bar, but the interest was palpable. And our friends at multiple banks and investment banks are getting calls from investors in London, New York, and Frankfurt asking questions as they plan strategy.

But we need to be realistic: We need an extended period of policy stability if we’re going to lure back foreign capital and have it stick — whether you’re talking foreign portfolio investment, FDI, the carry trade, or interest in our debt.

#9- We’re going to be able to access debt markets again, and that’s a good thing. Sentiment among the pundits is that we are now in a much better position to meet our short-term debt obligations — nail that and we can access the eurobond market again, making it much easier for Maait and his team to effectively manage our debt.

#10- As one of the smartest people we know said yesterday: “Don’t be shocked if you see a bit of dollarization before we de-dollarize.” After a prolonged period of scarcity, some will cling to (or try to accumulate) USD in the days ahead and only let them go when the new FX policy proves credible.

#11- Expect several weeks of volatility. We’re all adjusting to a new reality, and the coming days won’t be a simple, linear journey. The key is for policymakers to stay the course and for business leaders to be level-headed as we push through the days to come. Small hiccups in the coming days don’t necessarily suggest we’re deviating off course, though they bear watching.

#12- And because it’s all about sentiment, you can expect a steady drip of announcements from banks and the government as restrictions ease and hard currency is made available. The goal: To convince holders of USD (particularly tourism and hotel operators) that it’s safe to de-dollarize while sending the right signals to consumers and foreign investors alike.

#13- Will things get more expensive? We expect fuel price hikes and other subsidy cuts to have a transient impact on prices, but remember: The EGP is now changing hands at just under 50 to the greenback. Most goods on shelves now were priced at an implied exchange rate of something around EGP 70. As both EFG Hermes’ Mohamed Abu Basha and HSBC’s Simon Williams have noted — prices should cool.

We need to make sure that we learn the right lessons. Those lessons are many, but we can boil them down to four:

The policy goal is not the exchange rate, it is to see broad-based economic growth led by the private sector with an inflation-targeting monetary policy regime that uses multiple tools to sustainable growth. A flexible exchange rate is a shock absorber — a peg is a boat anchor.
We absolutely need infrastructure after nearly three decades of significant underinvestment in the run-up to 2011 — but it needs to be paced out.
The private sector absolutely cannot let up on the idea of exporting at the same time as we cater to domestic demand. Tourism, manufacturing, services — they’re all key. Private-sector-led growth is the only way forward.

Covid, the war in Ukraine, and genocide in Gaza have all presented external shocks, but they’re shocks that other countries have absorbed. Many emerging and frontier markets let their currencies slide to remain globally competitive as covid unfolded. We did not. We didn’t adjust after the war in Ukraine prompted capital flight from our market and many others. And we’ve sagged under fallout (cf: Suez Canal receipts, broad sentiment) from Israel’s brutal war in Gaza.

The hope now? “When you do the right thing, when the signals to the market are encouraging, you set up a virtuous cycle,” says Abu Basha. “You attract foreign inflows in addition to the IMF program. You’ll see a boost in reserves. And, critically, you’ll start seeing USD already in Egypt flowing into the official market. The right policy moves create confidence that, with high rates, brings in foreigners and gives locals confidence.”

Exchange rate policy should be a shock absorber, not a boat anchor.

PSA-Ramadan hours kick in next week: Shops, malls, restaurants, and cafes will be allowed to stay open until 2 am during the month of Ramadan and the Eid Al Fitr holiday, according to a Local Development Ministry decision published in the Official Gazette. The extended hours will come into effect on Sunday.

Meanwhile, at government offices: Public sector employees will be heading to work from 9 am to 2 pm during the holy month, according to a cabinet statement.

Banks will follow suit: The central bank will soon share banks’ working hours for the month.

What got us there: A float of the Egyptian pound and a 600 bps rate hike

CBE takes its hands off EGP, delivers 600 bps rate hike: The Central Bank of Egypt floated the EGP yesterday, leaving the exchange rate “to be determined by market forces” after it hiked interest rates by 600 bps at a surprise monetary policy meeting.

The EGP is worth just under 60% less against the greenback this morning compared to the same time yesterday, having closed the day at a range from 49.50 to 50.85 — it had been stuck at 30.95 since last year.

What about interest rates? The CBE raised its overnight deposit rate by 600 bpd to 27.25%. The lending rate now stands at 28.25% and the main operations rate is now at 27.75%. This is the second rate hike of 2024, following a 200 bps move last month.

“The unification of the exchange rate is crucial, as it facilitates the elimination of foreign exchange backlogs following the closure of the spread between the official and the parallel exchange rate markets,” the CBE said in a statement (pdf).

But, so too is a focus on inflation: The CBE said it will “continue the transition to a flexible inflation targeting regime … and continue to target inflation as its nominal anchor.” This comes as the FX crunch, rising global commodity prices, and domestic supply shocks have hampered economic growth and added to inflationary pressures, the bank explained.

Inflation could soon cool off significantly: Many (perhaps even most) goods now in Egypt are priced at an implied exchange rate in the EGP 70 range, so an EGP in the 40-50 band against the greenback is an appreciation for most businesses and households, suggesting the inflationary hit from the float could be very manageable — and trigger a faster-than-expected transition to a series of rate cuts as early as this spring or summer.

What will drive inflation: An expected rise in fuel prices (the state can’t afford to have its subsidy budget fly out of control) would hit the price of food, for starters.

AND- High interest rates mean the government's cost of borrowing just went up, too. That could see the cost of debt service rise by as much as 8% by 2H 2024 to something in the range of EGP 800 bn to EGP 1 tn, a senior Finance Ministry official tells us.

Big interest rates = big foreign appetite for Egypt?Egypt is expected to see the return of foreign inflows to debt markets, lured by high interest rates, the official added. Yields on debt instruments have jumped in the past few days, with international investors signaling they’re looking for returns of at least 30%, the source added.

The private sector doesn’t like high interest rates, either: “While the CBE acknowledges that the tighter [monetary] stance could result in a short-term contraction in the private sector’s real credit growth, the persistence of excessive inflationary pressures poses greater risks to its stability,” the central bank said, adding that the hike will facilitate the private sector’s growth over the medium term.

Where did analysts see the EGP in the run-up to the float?

HSBC’s chief economist for CEEMEA, Simon Williams, told Enterprise earlier this week that his view was largely unchanged at 40-45;
Oxford Economicssaw the EGP falling to 55-60 to the USD;
Bloomberg’s chief emerging markets economist Ziad Daoud predicted the greenback to change hands at 50 or more;
Capital Economics is the least optimistic, seeing the EGP dropping to 65 against the USD.

^^ With the exception of HSBC’s figure, the others were all speaking in early February — it will be interesting to see how they update their 12-month forecasts in the days to come.

Madbouly sounded the right notes as he unveiled a super-sized USD 8 bn IMF package

Egypt has lined up a USD 8 bn program with the International Monetary Fund and could add another USD 1-1.2 bn in climate finance if separate negotiations translate into an agreement, Prime Minister Moustafa Madbouly said at a press conference yesterday with Central Bank of Egypt Governor Hassan Abdalla and IMF mission chief for Egypt Ivanna Hollar (w atch, runtime: 18:13).

The agreement came together yesterday after the central bank announced the float of the EGP and a jumbo rate hike. All of this was built on a pledge two weeks ago of up to USD 35 bn worth of investment from Abu Dhabi’s ADQ, including some USD 24 bn in payments for the development rights to Ras El Hekma. The first payment from ADQ arrived in Egypt last week.

The fine print: This agreement is subject to approval by the IMF’s executive board, which will meet to consider the pact before the end of the month, Hollar said at the presser.

And there might be more to come: The agreement will be followed by more funding — in soft loans — fromother international partners like the World Bank and EU, Madbouly added. (We don’t expect bns from the EU, which has perhaps EUR 500 mn more headroom for Egypt, we’re told.)

It will all come together to a “large comprehensive package,” Madbouly said at the press conference, adding that the funding “will once again allow Egypt to be fiscally stable and carry on with its structural reforms.” (Tap or click here to read the full cabinet statement.)

As the IMF sees it: The expanded package ”seeks to preserve debt sustainability, restore price stability, and reinstate a well-functioning exchange rate system, while continuing to push forward deep structural reforms to promote private sector-led growth and job creation,” Hollar said.

It should also open the door more for the private sector: The reforms are also aimed at “fostering an environment that enables private sector activity,” according to Hollar — a move that will create jobs and attract fresh investment.

What the prime minister is saying: The agreement comes within the framework of a wider set of structural reforms that aim to increase FX reserves, reduce foreign and local debt, ensure the consistent flow of FDI over the coming period, see the economy achieve high growth rates, and reduce inflation, the prime minister explained.

BACKGROUND AND FINE PRINT-

The war on Gaza also played a role in upping the package: Hollar cited the impact of the war on Gaza complicating macroeconomic challenges and its effect on tourism inflows and Suez Canal revenues as a reason behind its decision to nearly triple the size of the package — we had originally signed up for a USD 3 bn program, but it was effectively put on hold when we failed earlier to float the EGP.

MEANWHILE- Our first and second reviews are finally happening: The Fund and Egyptian authorities have reached a staff-level agreement “on the economic policies needed” to complete the two delayed reviews of our USD 3 bn loan program, Hollar said. The reviews had been pending the Fund’s approval that Egyptian policymakers had made sufficient efforts to reduce inflation and gradually move towards an inflation-targeting regime.

Remember: The IMF approved our 46-month USD 3 bn loan program back in December 2022, but we are yet to receive most of it after we time and time again fell short of complying with key conditions of the loan.

The IMF says Egypt promised to slow down spending on infrastructure

IMF mission chief for Egypt Ivanna Hollar says cabinet has pledged to slow spending on infrastructure as part of a package to bring more discipline to how we manage fiscal policy.

Cabinet agreed with the IMF to implement structural reforms that would also include “a new framework to slow down infrastructure spending, including projects that have so far operated outside regular budget oversight,” Hollar explained.

A hard ceiling on public investment: The government will introduce a ceiling on public investment for FY 2024-25, where the total of all public investment spending — that includes all ministries, economic bodies, the Public Enterprise Ministry’s companies, and state-owned companies — will not exceed GP 1 tn, according to Madbouly.

Putting words into action: A committee will be formed to oversee that the government abides by this decision to allow the private sector to lead the country’s economic growth. “The goal for the state is that the private sector should be the largest contributor to the total investments,” Madbouly said.

Promises of fiscal prudence: “The authorities agreed to maintain fiscal prudence over the medium-term and step-up efforts to mobilize additional domestic revenues, including through the rationalization of tax exemptions as well as to use a substantial part of divestiture proceeds to reduce debt,” Hollar said.

Could we get a bit more breathing room?Payments owed to the IMF under maturing facilities could, under certain conditions, be rescheduled in a bid not to put undue pressure on the EGP, two government sources told Enterprise.

Two exchange rates is a “disease that throws things out of balance,” says CBE’s Abdalla

Having two exchange rates is akin to a “disease that throws things out of balance,” said Central Bank of Egypt (CBE) Governor Hassan Abdalla at a press conference yesterday evening (watch,runtime : 51:54) following the bank’s decisions to raise interest rates and float the EGP. The CBE also issued a statement (pdf) after the press conference.

A parallel market exchange rate before yesterday’s moves was the result of “a lack of confidence in the EGP or the management of cashflows,” as well as a lack of confidence in what the path forward looked like, Abdalla said.

While inflation is now on a downward trajectory, Abdalla said, it is expected to exceed the CBE’s targets of 7% (± 2%) by 4Q 2024, according to the CBE statement.The CBE will announce a new target soon, and will not hesitate to use any tools in its arsenal to reach single-digit inflation in the medium term, Abdalla said at the IMF presser yesterday.

Yesterday’s moves are just the first steps: Reaching single-digit inflation rates isn’t going to happen overnight, Abdalla noted, stressing that yesterday’s interest rate hike and the decision to float the EGP are just the first steps. The rest of the path forward “will need work, not just from the central bank, but on the real economy,” he said.

Critically: “We’re not targeting an FX price, we’re targeting inflation,”Abdalla said at the presser. Moving away from an economic policy centered on the exchange rate and towards “a full-fledged inflation targeting policy” is critical for a sustainable long-term view on the economy, IMF Executive Director Mahmoud Mohieldin said earlier this week.

Can the CBE intervene in the market? The CBE will keep its finger off the scale and allow market dynamics to determine FX rates but — like any central bank — it can intervene at any point by making liquidity available in the interbank market “if we see any abnormal fluctuations in the exchange rate, and now we have the resources to do so when needed,” Abdalla added.

For the record: The CBE didn’t intervene in the market yesterday, Abdalla said. “There were media reports that the central bank intervened by injecting liquidity into the interbank system, but we didn’t need to intervene. I can say proudly that all the resources that came in, came from the market,” he said.

The price of credit default swap contracts — which essentially reflect the cost of insuring Egypt’s debt — have plummeted to 2% from 27% annually, signaling renewed investor confidence in Egypt. Meanwhile, the cost of insuring our debt is now at 6% — cooling down from 25% earlier, Abdalla added. As a result, the foreign debt market is now accessible should we need it.

The central bank has enough FX reserves to cover its debt obligations and maintain a surplus, Abdalla also said. It seems that ministries have already got the memo, with an unnamed government source telling Al Borsa in a report published late last night that the Oil Ministry will pay USD 1-1.5 bn in arrears to international oil companies over the coming period.

Businesses can sign forward contracts that enable them to lock an exchange rate for a certain period of time to hedge against any potential fluctuations in exchange rates. These contracts are already available in most of the Egyptian banks, Abdalla said.

Banks roll out high interest rate CDs, ease currency controls on credit cards

The nation’s banks got clear instructions yesterday from the central bank: Start easing restrictions as quickly as each bank is individually able to do so as we transition to a new normal.

Here’s how that played out:

#1- New high-interest CDs: State-owned Banque Misr and National Bank of Egypt have rolled out high-interest certificates of deposit (CDs) (here and here, pdf). The three-year CDs carry a declining rate, offering buyers an annual payment of 30% for the first year, 25% for the second year, and 20% for the third year, or quarterly or monthly payouts at reduced annual rates. Quarterly payouts start at a 27% annual rate, declining 400 bps each year, while monthly payouts start at 26% and decline 350 bps each year.

ICYMI: The two banks in January introduced then-record high CDs with yields up to 27% in January to reel in liquidity after CDs worth around EGP 500 bn matured.

#2- FX spending limit revisited: TheCBE told banks they can ease over time limits on foreign-currency transactions, a senior banker tells us. The central bank is leaving each institution to ease restrictions at its own pace. The CBE is also allowing banks to ease curbs on the use of EGP credit cards for FCY-transactions in Egypt. It remains unclear when it will scrap limits on the use of EGP debit cards abroad.

#3- Black market no more? FX trading on the black market came to a halt yesterday, signaling that the central bank achieved one of its main goals with the recent wave of reforms. The parallel market is “on its way to disappearing completely,” Banque Misr Chairman Mohamed El Etreby said (watch, runtime: 4:35).

#4- Import backlog to ease: Banks exchanged more than USD 1 bn via the interbank market yesterday to cover backlogged requests to fund the imports of basic commodities. Importers of strategic and critical goods should see relief first, one of the nation’s most senior private-sector bankers tell us. “We will prioritize importers of food, medicine and the like — the idea is to get critical stuff out of ports as soon as possible and then move on to production inputs and everything else in the backlog.”

Estimates of the size of the backlog vary wildly depending on who you talk with, but we think it’s in the range of USD 6-8 bn when you exclude duplicate orders and other distortions. Prime Minister Mostafa Madbouly has signaled that the release of goods from ports is a priority.

What to watch for next: Inflows and cooling inflation top the list

Industry players + market watchers on what’s coming down the pipeline:Yesterday’s package of measures will start to have (positive) knock-on effects, experts said overnight, with some of these already starting to take shape.

#1- Inflation to cool: Commodity prices are expected to fall, Federation of Chambers of Commerce Secretary-General Alaa Ezz said, with some prices — such as the price of cooking oil — already starting to decline. The end of the FX shortage should also increase the supply of goods, leading to competition that will help drive prices down, Ezz added.

#2- More FDI: Expect foreign investments to pour in over the next few months, as many investors — including those within the state privatization program — had been holding off inking any binding agreements before the float of the EGP, Ezz added.

#3- Fuel prices to increase: The government’s fuel pricing committee could meet today after a two-month hiatus and raise fuel prices by more than 10%, Cairo Capital Securities Chief Economist Hany Genena told Al Arabiya (watch, runtime: 4:21).

#4- Remittance recovery? Remittances were down 30% y-o-y in 2023 asEgyptians abroadheld onto their money or sent it back through parallel mechanisms. The government said it wants to raise remittances — one of Egypt’s biggest sources of FX — from Egyptian expats by 10% each year to reach USD 53 bn by 2030.

#5- When can we expect the MPC to meet next? The central bank’s Monetary Policy Committee is scheduled to meet on Thursday, 28 March. It so far remains unclear whether yesterday’s extraordinary meeting could mean a change of plans.

#6- A new cabinet lineup? “Investors and the business community will be looking to see who sits on the cabinet economic team when we see a new government formed [after the start of President Abdel Fattah El Sisi’s next term in office]. Policy stability will be key. It’s not just about the monetary piece of the puzzle,” our friend Mohamed Abu Basha, managing director and head of macroeconomic analysis at EFG Hermes, told us yesterday.

Experts, analysts’ two cents on the CBE’s decisions

Business leaders and pundits welcomed yesterday’s moves by the central bank and the announcement of a new IMF facility.

ON THE AIRWAVES-

“Today’s decisions put us back on the right track and bring back balance,” our friend Sherif El Kholy, partner and Middle East and Africa head at PE giant Actis, told Extra News (watch, runtime: 7:24). What’s more important than an attractive exchange rate is the availability of FX liquidity, he added, explaining that yesterday’s decisions “will bring back FX liquidity, which will curb inflationary pressures.”

The end of arbitrary pricing: “There had been a lot of inconsistencies in pricing in recent months, and there was plenty of exaggeration in the pricing of essential commodities in particular,” Al Gioshy Steel chairman Tariq Al Gioshy said (watch, runtime: 5:35). Prices are broadly expected to cool now that industries know how to approach their pricing based on the USD rate.

ON THE BANKING FRONT-

Some banks may have to increase their capital to meet the CBE’s capital requirements, EG Bank board member Mohamed Abdel Aal told Enterprise. “It’s hard to tell where the price of the EGP will stabilize, but with sufficient FX liquidity in local banks to meet demand, there won’t be a big impact on banks’ capital adequacy ratio,” he added. If that doesn’t happen, then some banks will probably have to increase their capital to meet requirements, Abdel Aal said.

More needs to be done: “Unifying the exchange rate and speeding up the implementation of the state privatization program will help attract FDI and improve rating agencies’ outlook for the Egyptian economy — but there’s more to be done to reap the benefits of these decisions,” Abdel Aal said.

The banking sector is sitting pretty: “The banking sector is among the biggest beneficiaries of the interest rate increase,” HC Securities said in a note seen by Enterprise. “The interest rate hike will increase the weighted average cost of capital for companies listed on the Egyptian stock exchange, reducing their valuations. However, the impact will vary from sector to sector,” the note said.

Don’t count out the EGX, though: While high-yield CDs will compete with equities for attention in the coming days, HC expects “the anticipated economic improvements will have a positive impact on stocks after the market absorbs” recent policy changes.

The float didn’t just make the headlines at home

The foreign press were taken by surprise just as much as us, and jumped on the phone with analysts to try and figure out what’s in stock for the country. Bloomberg led with the headline that “Egypt’s shock rate unlocks USD 8 bn IMF Loan” and the the Wall Street Journal wrote that while they expected a devaluation, “the announcement of a complete free float — and its timing on Wednesday — was a surprise.” Big name analysts were also caught off guard, with Goldman Sachs economist Farouk Soussa saying that “the big surprise of the day was the mega hike, which over-delivered and has boosted confidence in the market,” in a separate report by Bloomberg.

“I think the crisis is over,” FIM Partner’s macro strategy head Charlie Robertson told the Financial Times. Similarly optimistic was Societe Generale emerging markets strategist Gergely Urmossy in a Bloomberg piece, saying that in the absence of a hard peg, “Egypt’s outlook will improve.” There was even excitement from some corners, with Aviva analyst Carmen Altenkirch saying “the devaluation has got the market very excited.”.

The sole note of negativity: Bloomberg and the WSJ both raised concerns that the float could fuel inflation, though most analysts we’ve spoken to expect the impact to be muted at worst — goods now in the country were priced with the USD at an effective exchange rate of about 70.

Nilus gets the go-ahead from cabinet to build two towers on former NDP HQ

Gov’t sets the wheels in motion on the first post-float privatization project: Cabinet has given Nilus Hotel and Commercial Services and Nilus Residential Services approval to build two commercial and residential towers on the National Democratic Party’s (NDP) former headquarters, according to a decision published in the Official Gazette. The two projects, reportedly worth a combined USD 5 bn, are due for completion in 2Q 2028.

In detail: Nilus Hotel and Commercial Services is set to build a 75-story hotel, commercial, and administrative tower, while Nilus Residential Services will build a 50-story residential tower that includes 446 luxury housing units.

Remember: The government in August ordered the transfer of the 16.6k sqm land plot from the Sovereign Fund of Egypt’s (SFE) tourism sub-fund to the two companies. The firms appear to be established for the NDP redevelopment project, which is one of several landmark projects aimed at developing old buildings in central Cairo and making the area more attractive for investments.

Contact Financial’s net income rose 14% y-o-y in 2023

EARNINGS-

Contact Financial reports “impressive” results for 2023: Non-banking financial services firm Contact Financial saw its normalized net income rise 14% y-o-y to EGP 693 mn in 2023 on the back of growth in its financing and ins. divisions, the company said in a press release (pdf).

Auto loans and consumer finance helped drive growth: Contact’s financing division saw itsnet income grow 30% y-o-y to EGP 625 mn in 2023, with new financing rising 46% y-o-y to reach EGP 16.6 bn during the period. New financing in auto loans was up 93% y-o-y, while new financing in its consumer finance segment grew 41% y-o-y.

Planet Finance breathes a sign of relief as CBE takes action, gov’t lines up USD 8 bn IMF facility

Planet Finance breathed a sigh of relief yesterday after the 600 bps interest rate hike and the float of the EGP. Local traders reallocated, while a handful of more adventurous foreign investors have started taking positions in the local market as they look to get exposure to high-yield instruments.

#1- The EGX30 fell 3% at yesterday’s close, ending the day in the red after rising as much as 5% in intraday trading before paring back its gains. Many investors had bought into equities as a hedge against an EGP worth 65 or more to the greenback. This is investors taking profits.

The key thing to remember: The EGX30 just got much more attractive in USD terms to foreign portfolio investors.

#2- Bonds soar: Egypt’s USD-denominated debt — especially longer-dated bonds — surged on the news, with those maturing in 2047 gaining as much as 3.7 cents during trading, narrowing the yield spread between Egyptian USD bonds and US treasuries to its narrowest margin since June 2021. The country’s 2047 bonds ended the day trading up nearly 3% at 82.7 cents.

#3- Gold rush: The price of 24 karat gold surged almost 15% to EGP 3,657 per gram.

EGX30	29,743	-3.0% (YTD: +19.5%)
USD (CBE)	Buy 49.43	Sell 49.57
USD atCIB	Buy 50.5	Sell 50.6
Interest rates CBE	27.25% deposit	28.25% lending
Tadawul	12,562	+0.7% (YTD: +5.0%)
ADX	9,225	-0.1% (YTD: -3.7%)
DFM	4,248	+0.1% (YTD: +4.6%)
S&P 500	5,105	+0.5% (YTD: +7.0%)
FTSE 100	7,679	+0.4% (YTD: +0.3%)
Euro Stoxx 50	4,915	+0.5% (YTD: +8.7%)
Brent crude	USD 82.91	+1.1%
Natural gas (Nymex)	USD 1.93	-1.4%
Gold	USD 2,158.20	+0.8%
BTC	USD 66,398.66	+5.0% (YTD: +57.4%)

My Morning Routine: Seif Sherif, co-founder of Double Dribble League

Seif Sherif, co-founder of Double Dribble League: Each week, My Morning Routinelooks at how a successful member of the community starts their day — and then throws in a couple of random business questions just for fun. Speaking to us this week is Seif Sherif (LinkedIn), co-founder of Double Dribble League.

My name is Seif Sherif and I am the co-founder of Double Dribble League (DDL), Egypt’sfirst amateur basketball league. The idea for the league came after my group of friends and I, who grew up playing basketball together and in clubs, retired [from the sport] when we hit our mid-20s. We realized that we missed the competition and the team spirit of the sport, so the idea emerged to create a league for retired amateur players. Since we’d all grown up watching the NBA and European basketball leagues and dreamed of playing in a similar atmosphere, we wanted the league to encompass all of what we saw on TV — good courts, international referees, cameras, videographers, and social media coverage.

We play year round: We found that the demand is huge. Since 2021, we have held threeseasons of the Men’s Double Dribble League and last year we introduced the Women’s Double Dribble League, plus we also run a Ramadan tournament. Every season is about development and new products, our players expect everything to be perfect and have a lot of requests. This helps us to develop the leagues with every passing year.

I’m a tea person, so the first thing I do when I wake up around 7am is drink a cup whilereading my emails and the morning edition of Enterprise Egypt, as well as the UAE and Saudi editions. Then, I stretch before heading into work.

During the day I’m an investment banker. I’m in the office at 9am and try to leave at 7:30pmat the latest, unless I’m in the middle of a transaction. Before covid, the days of an investment banker used to be very long, but after the pandemic the hours became much better.

My evenings are for the league. My DDL day begins at 8pm with phone calls with my partners.The flow of work depends on whether we’re in the period before a league kicks off or in the middle of the season. Before a season begins, my responsibilities include targeting and pitching to sponsorship partners, meeting with potential venue operators, and planning the schedule for the whole league ahead.

During the season, we oversee all the match operations to make sure everything goesaccording to plan — but it’s an easy task as we are a team of seven and everyone knows their role. Matches take place on a Friday and then on Saturdays we have a morning meeting to plan for the week ahead. On Thursdays, I review the social media content our designer has created, like match highlights and pictures before they’re published.

DDL tries to raise the bar: We make jerseys for each team and every player has a profilecontaining their statistics and highlights. We bring in photographers and videographers for the games. The new generation of players — the young guys — are looking for the extra stuff, they want to have good photos and content for their social media profiles.

Work begins a month or two before a league’s season kicks off: The last season — themen’s league — started in October and ran every Friday for fifteen weeks. We open team applications a month prior and require that every team signs up with a minimum of 15 players.

On the court: I’m at matches every single week of a season to make sure they run smoothly.The last time I had a Friday off was in October last year, but I’m very happy doing it so I don’t feel like I’m missing out on anything. This year, I’ve been coaching instead of playing — I’ve been recovering from a back injury for the past six months.

I try to have a work-life balance and plan something fun every day — I watch a movie or goout with friends and before my injury I played basketball, football, and padel. It makes the workday much better. I sleep around midnight but sometimes there are NBA matches on, which due to the time difference means I catch the game at 4am and then go to work. My favorite team is the Dallas Mavericks — I like an underdog.

Planning ahead keeps me focused. I need to prepare and write everything down becauseboth of my jobs are very detail oriented. I try to keep both jobs separate, so that when I’m working as an investment banker, I’m not focusing on the league, even though sometimes I’m very excited about DDL and ideas start flowing while I’m at my day job.

Looking ahead, we want to grow DDL’s capacity: We hope that next year we can operateDDL leagues at two destinations in Cairo with ten teams playing in each. We are also considering introducing school, university, or academy leagues. I’m very optimistic about our next steps.

My uncle once shared with me a quote from legendary US basketball coach JohnWooden — “failing to prepare is preparing to fail.” I have this written in front of me on my desk to remind me to prepare for anything as much as I can. I also try to remember to have fun and not to stress so much over things. At the end of the day everything passes and any failure is temporary.

CALENDAR

2024

MARCH

4-7 March (Monday-Thursday): EFG Hermes One on One conference, JW Marriott Hotel Marina, Dubai.

7 March (Thursday): Deadline to apply to Shalateen Mining Company’s international gold exploration tender.

10 March (Sunday): First day of Ramadan (TBC).

20 March (Wednesday): End of sugar export ban.

28 March (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

28 March (Thursday): Industrial Development Authority to close applications for 1 mn sqm of land in 10 different governorates.

29 March (Friday): Egypt removed from JPMorgan Chase’s Emerging Local Markets Index Plus.

APRIL

1 April (Monday): Deadline to bid for 23 blocks in an international oil and gas tender.

9 April (Tuesday): Eid El Fitr (TBC) (national holiday).

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).

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).

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).

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

January 2024: The Red Sea Ports Authority is set to finalize an agreement with the Abu Dhabi Ports Group for the operation and maintenance of the tourist passenger terminal in the Sharm El Sheikh Sea Port.

February 2024: Egypt will sign a USD 1.5 bn financing agreement with the International Islamic Trade Finance Corporation (ITFC).

February 2024: Funds from the Islamic Development Bank for the high speed electric railway will get the sign off.

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: 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.

1H 2024: The European Union is set to hold an investment conference in Egypt during spring.

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

EVENTS WITH NO SET DATE

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

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