In a dash to get to Eid break, the House has signed off on the budget in record time: The House of Representatives broke a legislative land speed record on Wednesday when it signed off on the Ismail government’s EGP 1.206 tn budget for FY2017-18 after only two rounds of debate on the floor of Parliament, Al Mal reports. A quick refresher on the provisions of Amr El Garhy’s latest: The nation’s largest-ever budget targets a primary surplus of 0.3% for the first time in years and sees GDP growing by at least 4.6% in the next fiscal year. State spending will be backed by higher tax revenues, including by a 1 ppt bump in the baseline value-added tax to 14%.

The new budget sees public spending rising 21.3% as the government earmarks larger sums for healthcare, education, higher education, and research (together about 10.3% of GDP). EGP 24.8 bn has been earmarked for state investment in healthcare, an increase of 15% over last year’s budget, while the government will invest EGP 14.4 bn in education and training, according to Al Mal. (Those figures are for state investment in the sectors as distinct from budget support for ongoing operating costs.) EGP 3.5 bn was earmarked for the rehabilitation of slums. Tap here and here for our full breakdown of the budget.

The FY 2017-18 budget includes EGP 75 bn spending to shore-up the social safety net ordered by President Abdel Fattah El Sisi on Tuesday, according to a Finance Ministry statement. These include increasing monthly food subsidy allowances on ration cards to EGP 50 from EGP 21 for each cardholder. The Ministry says the earmarks aim to ease the impact of the economic reform program on Egyptian households. 90% of citizens will directly benefit from the increase, Finance Minister Amr El Garhy noted.

Even with all the increases in social spending, El Garhy maintains that the government can meet its budget deficit target of 9.1% of GDP.

No new taxes are in the pipeline and there’s no plan to hike the rates of existing levies to support increased welfare spending,Vice Minister of Finance Amr El Monayer told Al Masry Al Youm. Some of the new spending was already accounted for and approved in the budget, Vice Minister of Finance Mohamed Maait added, while others among the president’s pledges can easily be accommodated within the current budget. Still, the Supply Ministry claims increased spending on subsidies came as a surprise and says it is now scrambling to meet the increased demand for goods, according to statements attributed to ministry spokesperson Mamdouh Ramadan by Al Shorouk. Prior to El Sisi’s welfare package, total spending on subsidies was due to grow 19% in the fiscal year starting July 1. That comes as petrol subsidies are expected to fall to about 33% of total subsidy spending, signaling a fuel price hike is in the cards sometime in the new year.

Offsetting the cost of subsidy increases by raising prices? Some of the cost of new welfare outlays will be recoupled by repricing subsidized goods closer to market norms, Supply Ministry officials tell Al Shorouk. The EGP 50 allowance will also be issued to each individual registered on a single subsidy card, the source also said, adding that there are no imminent plans to change the bread point system.

The bump in welfare spending under the new budget received extensive coverage in the foreign press, with some, including the Associated Press and Bloomberg, suggesting the move was taken to offset the unpopularity of the agreement to hand Tiran and Sanafir to Saudi Arabia.

…Separately, the Finance Ministry announced that the government recorded a budget deficit equivalent to 8.3% of GDP in 10M2016-17, according to Al Masry Al Youm. That’s about EGP 283 bn, if you’re keeping track at home.

Also on Wednesday: The House also signed off on the government’s 2017-2020 sustainabledevelopment plan, which, among other things sees GDP climbing to a high of 6% in 2020. It also gave a preliminary nod to the National Elections Act, which mandates judicial supervision of the national elections regulator for a 10-year period, according to AMAY.

The Health Ministry is mulling the imposition of price controls on private hospitals: The Health Ministry has apparently finished reviewing a bill that, if enacted, would give it new authority to impose price controls on private-sector hospitals and clinics, according to Health Minister Ahmed Rady. He told Al Masry Al Youm that the bill, which would expand the ministry’s role beyond issuing licenses, would end the practice of private-sector facilities setting prices “unilaterally and randomly.” The price caps would be based on a ministry-imposed “tiering” of healthcare facilities: The proposal would divide hospitals into five brackets based on criteria including efficiency of the medical and nursing staff, quality of medical services, nature of the services required, and the amenities offered. Physicians’ fees at private clinics — which make up about 95% of clinics across the country — would be capped at EGP 100 a visit for general practitioners, EGP 200 for specialists, EGP 400 for consultants, and EGP 600 for consultants who are university faculty members. Rady said that the legislation is especially important since the private sector makes up the bulk of the medical industry in Egypt with over 3,000 private hospitals compared to only 700 public ones.

The Ismail government expects to receive the second tranche of the IMF’s USD 12 bnextended fund facility next month, Prime Minister Sherif Ismail told the press yesterday, Youm7 reports. Finance Minister Amr El Garhy had said earlier this week that we should expect to hear from the IMF’s executive board in a few weeks’ time on the matter. (As of this morning, Egypt isn’t on the publicly disclosed schedule, which currently runs through 30 June.) A delegation from the fund reached a staff-level agreement with the government last month to disburse the second USD 1.25 bn tranche after giving the country’s economic reform program a clean bill of health.

Canadian export credit agency Export Development Canada is financing 85% of GE’s USD 575 mn sale of 100 locomotives to Egypt, sources tell Al Mal. GE is set to be paid in 24 installments over 12 years and the government will cover the remaining 15%, either from the state coffers or through a loan. Separately, a “sovereign security entity” will provide the National Railway Authority with USD 45 mn worth of equipment, an unnamed source tells Al Mal. The new equipment is expected to contribute to the development of 80.25 kilometers of railway lines per month.

PepsiCo has invested USD 1 bn in Egypt over the past two years, the company’s general manager for Egypt, Mohamed Shelbaya, is quoted as having told Al Borsa. Pepsi has a 55% market share in soft drinks, while subsidiary Chipsy controls a 60% share in the potato chip / crisps market. Shelbaya says PepsiCo sales took a 10-12% hit recently due to inflationary pressures, but he expects them to rebound and stabilize. The company is also working on enhancing its domestic footprint by increasing the local component and inputs used for its products manufactured in Egypt. One such expansion is in PepsiCo’s move to acquire land to grow potatoes on domestically to feed its production down the supply chain. Shelbaya also noted that the company is in talks with the Trade and Foreign ministries to expand the scope of its exports into East African markets.

Thank God almighty, 4G frequencies are here at last? Egypt’s mobile network operators reportedly received their 4G frequencies on Wednesday, sources tell AMAY. MNOs will run trial operations over the next two months, after which 4G services will be fully operational for clients. During the two-month window, MNOs will also be working to redistribute mobile frequencies around the country, the source adds. Operators have received official notice with the frequencies, an unnamed high-ranking executive at one of the companies confirmed to Al Mal, adding that all four of them have been conducting trial operations on a small scale since September.

Food discovery platform Elmenus is planning on expanding to new markets in Africa and the Middle East next year, CEO Amir Allam told Al Borsa. Elmenus recently closed a USD 1.5 mn Series A funding round with an investment from Algebra Ventures. The platform wants to cooperate with restaurants to offer new services for customers, he said, noting that Elmenus’ user base triples in Ramadan to three mn compared to the rest of the year.

Orascom Hotels and Development’s EGM voted yesterday to change the name of the company to Orascom Development Egypt, according to a bourse disclosure.

Supreme Constitutional Court lays down the law on Smurf Islands: The Supreme Constitutional Court (SCC) has said lower courts have no say on any border demarcation agreements. The supremes set aside all verdicts issued by lower courts on the transfer of Tiran and Sanafir to Saudi Arabia pending their own ruling on whether the agreement is constitutional, Reuters reports. The SCC’s ruling refers to verdicts by the Supreme Administrative Court and the Court of Urgent Matters, according to Al Masry Al Youm. This comes a week after the House of Representatives approved the agreement, which is yet to be ratified by President Abdel Fattah El Sisi. Former State Council head Mohamed El Gamal tells Ahram Gate the agreement is a matter of sovereignty, which means even the SCC will see no grounds on which it could rule, leaving the House of Representatives having the final word. Once the House’s decision is published in the Official Gazette, the handover is effectively done, adds El Gamal.

…Meanwhile, there are apparently five international companies carrying out USD 750 mn worth of seismic studies in Egypt’s maritime limit under the demarcation agreement to identify potential oil and gas fields, said Oil Minister Tarek El Molla, according to Al Mal. The companies are due to present their reports by the end of the year. In confirming the studies, El Molla noted that it was Egypt’s border demarcation agreement with Cyprus that prompted the studies that led to the finding that the Zohr supergiant field fell in Egyptian waters.

Of slippery slopes and the thought police: Al Azhar has presented its “anti-hate crime” legislation to President Abdel Fattah El Sisi, Grand Imam Sheikh Ahmed El Tayeb announced yesterday, Al Shorouk reports. The bill would somehow ensure that religiously motivated hate speech does not enjoy protection under the constitution’s freedom of expression provisions and would bar media outlets from discussing contentious elements of religious beliefs, according to Al Ahram, which has the full text of the law. The bill would also ban discrimination on the basis of religion, which we had always thought was already covered under that thing called a “constitution.” Media and educational institutions that violate the law would see their licenses revoked.

A better alternative: A similar bill is being drafted by MP Mohamed Abu Hamed of the Support Egypt Coalition, but his version is meant to replace the (fatuous) clauses of the criminal code dealing with “contempt of religion.”

MbS takes over Mohamed bin Nayef’s cabinet positions: Newly appointed Saudi Crown Prince Mohammed bin Salman is taking over from his cousin, former crown prince Mohammed bin Nayef, as the kingdom’s deputy prime minister and interior minister, according to an official Saudi Press Agency statement. MbS, whose appointment came by royal decree, is also continuing as defense minister. Mohammed bin Nayef has pledged his allegiance to MbS, and Saudi state media published images showing MbS kissing his predecessor’s hand, CNN reports.

The new crown prince’s meteoric rise to power over the past several months made the announcement of his new position expected, but “the timing was a surprise, and puts the kingdom’s future in relatively untested hands,” considering KSA’s tensions with Qatar and Iran, and its ongoing war in Yemen, Reuters says. The move also has internal repercussions for the kingdom, including the marginalization of “a large cadre of older princes, many with foreign educations and decades of government experience the younger prince lacks,” the NYT’s Ben Hubbard notes.

US President Donald Trump called MbS yesterday to discuss “the priority of cutting off all support for terrorists and extremists” and efforts to resolve Arab countries’ spat with Qatar, according to a White House statement. Trump and bin Salman also talked economic cooperation during the call. The two leaders “have already established a working rapport,” having met twice in the past several months, the Associated Press notes, while Bloomberg suggests the young prince has “built the right ties in Trump’s White House.” President Abdel Fattah El Sisi also congratulated the new crown prince during a phone call yesterday, Al Masry Al Youm reports.

Embattled Uber boss Travis Kalanick resigned as CEO of the company on Wednesday, Bloomberg reports. The move comes after five of Uber’s major investors, including Benchmark Capital, wrote him a letter demanding his immediate resignation. His departure will leave the company scrambling to replace senior management including senior VP of Business Emil Michael and President Jeff Jones following repeated scandals.