Former military chief of staff Sami Anan was detained yesterday after the army summoned him for questioning over his bid for the presidency, campaign organizers told Reuters. The Armed Forces put out a statement on the detention that was read aloud by a spokesman, a version of which was dispatched to both the domestic and international press. The statement said the Armed Forces “will not overlook the blatant legal violations [Anan] has committed, which are a serious breach of the laws of military service.” Anan is alleged to have:

• Announced his candidacy “without seeking permission from the Armed Forces ... or taking the steps necessary to terminate his service,” necessary because under law military officers (even those in the reserves) must receive permission to resign their commissions before seeking elected office;
• Forged official documents that claimed his military service was over;
• Driving a wedge between the military and the Egyptian people in his declaration of his intention to run for president.

Read and watch for yourself: The Armed Forces’ televised statement can be seen here and the statement listing its charges against Anan can be read here (pdf).

The Armed Forces also issued a gag orderforbidding the publication or broadcast of any further news in the case until it completes its investigation.

Anan’s campaign announced it was going on hiatus until further notice “out of fear for the safety and security of all citizens who dream of change.”

Anan officially disqualified from running: National Elections Committee (NEC) has officially disqualified Anan from running, citing his “non-civilian status,” Al Masry Al Youm reports. This comes as NEC Chairman Lashin Ibrahim is said to have met with a high-level delegation from the US Embassy, as well as Mexico’s ambassador to Cairo, to reassure them that the presidential election would comply with international standards, Egypt Independent reports.

Lawyer and rights activist Khaled Ali will hold a press conference at 6pm today to announce his final position on a possible presidential campaign, Al Masry Al Youm reports. Ali’s campaign has said it is struggling to secure the minimum of 25,000 voter endorsements it needs to file his nomination papers before the 29 January deadline, alleging bureaucratic hurdles at government offices at which citizens are required to register as nominators.

International media reaction to Anan’s arrest: The overall theme is that while Anan may not have been a popular candidate, both of the most viable opposition candidates to President Abdel Fattah El Sisi’s re-election bid are now off the playing field. “The elder Mr. Anan, 69, was not considered a strong challenger to Mr. Sisi … But his detention does suggest how far Mr. Sisi is willing to go to clear the field of challengers — even if doing so means crossing senior figures inside the military establishment that is his political bedrock,” writes the New York Times’ Declan Walsh. Other outlets, including the Washington Post and the Financial Times, are taking note of rate at which potential rival candidates, some of whom have been military men, have been dropping.

The Ikhwan angle: Hamza Hendawi notes for The Associated Press how a letter penned by an Ikhwan member has provided loyalist media with additional ammunition to link Anan to the Ikhwan. Annan’s spokesman, Hazem Hosny, sought to distance him from the Ikhwan but “insisted that Islamists are an integral part of Egyptian society who should be included in the political process.”

Meanwhile, President Abdel Fattah El Sisi became the first to take the medical examination required for election candidates, MENA reports, according to Ahram Online.

Deadline next week: The deadline for candidates to enter the presidential race is Monday, 29 January.

LEGISLATION WATCH- Look out for sweeping amendments to the Companies Act now in the pipeline. The Investment Ministry has finished drafting amendments to the executive regulations of the Companies Act and has forwarded a draft of the changes to the State Council for review. As such, the new rules would go into effect without discussion in the House of Representatives, needing only the be published in the Official Gazette. Among the highlights:

Companies will no longer be allowed to hold on to treasury stocks for over a year. After the year is out, companies must either divest the shares or distribute them to employees as part of a profit-sharing mechanism, according to a ministry statement. Companies can hold on to treasury shares if they undergo a capital decrease.

The amendments would also limit share buybacks to 10% of the company’s shares and allow a weighted voting system when shareholders vote on board members.

Other amendments facilitate spinning off corporations, by allowing the company greater flexibility in dividing assets and shares. They also “facilitate trading of shares in newly spun-off companies,” though the statement does not elaborate on this point.

Other features of the changes: The amendments also bar sole-proprietorship companies from establishing subsidiaries that are also sole proprietorships. Another change would mandate the establishment of a single electronic platform to provide key investor services, such as establishing companies.

The amendments are the most sweeping changes to the regs of the Companies Act in 35 years, with 51 articles being amended, said Investment Minister Sahar Nasr. The draft is currently with the Egyptian Council of State (Maglis El Dowla) and will be issued once the review is completed. Amendments to the law itself that tweak how sole proprietorships are handled and give measures of protection for companies against whistleblowers were signed into law by President Abdel Fattah El Sisilast week.

The IMF released its report on the second review of the economic reform program, and as expected, the performance review was stellar across all key indicators. “This macroeconomic turnaround at home and the supportive global economic environment provide a unique opportunity to carry the reform momentum into areas that have historically been hard to tackle. Deep and lasting structural reforms are needed to create jobs as speedily as needed for Egypt’s growing population,” said IMF Mission Chief for Egypt Subir Lall.

Read for yourself: You can catch the landing page of the report here, or read the full report directly (pdf).

The IMF board has a favourable outlook on Egypt’s economy, “provided prudent macroeconomic policies are maintained and the scope of growth-enhancing reforms is broadened.” Drilling down, the board sees:

• GDP in FY2017-18 growing to 4.8% from 4.2% in the previous year, and reaching 6% in the medium-term.
• Inflation, which peaked in July 2017 at 35%, is expected to decline to around 12% by June 2018 and to single digits by 2019, reflecting the diminishing of the impact of the EGP float, subsidy cuts, and implementing the value-added tax and supported by the tightening of the monetary policy stance.
• The account deficit is expected to narrow to about 4.5% of GDP this fiscal year and further on to about 3.5% of GDP by FY2021-22. The primary fiscal deficit is projected to turn into a surplus of 0.2% of GDP in during th current fiscal year, after narrowing from 3.5% of GDP in FY2015-16 to 1.8% of GDP in FY2016-17.

Key highlights of the IMF’s policy review include:

• On inflation targeting and interest rates, “the CBE will need focus on seasonally-adjusted monthly inflation trends, and consider gradual monetary easing only if inflation expectations and key macroeconomic indicators consistently point to the absence of demand pressures,” said the report.
• Gov’t must target public debt: “Placing public debt on a clearly downward path will remain the program’s fiscal anchor,” with the ultimate target being to reduce general government debt from 103 percent of GDP in FY2016-17 to 87 percent of GDP in FY2018-19.
• Energy subsidy reforms must continue: The ongoing energy subsidy reform will continue to play a key role in fiscal consolidation, with energy subsidy spending expected to be cut to 4% of GDP in FY2017-18.
• Strengthening the private sector further is key: Strengthening competition and addressing corruption are key to achieving greater economic efficiency, while access to land continues to be one of the main hurdles for the private sector.

The IMF made a point to note that adopting policies for further inclusive growth must be a key focal point of the reform agenda. It gave three main recommendations on this front:

• Increasing revenues by reducing tax exemptions in the value-added tax and other policies which would make the tax system “more progressive.”
• Continuing cutting fuel subsidies, which mainly benefit the rich, and shift subsidy spending towards cash transfer programs like Karama and Takaful.
• Allowing the private sector to flourish.

Economists polled by Reuters Arabic are not as optimistic as the IMF or the Ismail government on Egypt’s growth prospects. Twelve analysts say Egypt’s GDP growth would be limited to 4.2% in the current fiscal year and will rise to 4.5% in FY2018-19. They see growth topping 4.6% FY2019-20. That’s substantially below the 5.3-5.5% rate projected for this fiscal year by the government.

Edita, Egypt’s largest producer of packaged snack food, is planning to start overseas operations to offset local currency fluctuations, Bloomberg’s Tamim Elyan writes. Chairman and Managing Director Hani Berzi says Edita is seeking to expand in sub-Saharan Africa and Asia through manufacturing projects and exports. The company had already announced plans to enter the Moroccan snack food market through a greenfield investment with Dislog Group last December. “We need the foreign currency and in times of crises companies with export proceeds enjoyed decent profitability. We think of exports as a must, not a plus … If things stabilize without surprises, the trajectory is always a smooth line of increasing volume, profitability and revenues,” Berzi says. Edita is focusing on restoring pre-devaluation profit margins by cutting costs and increasing the price of its products, he says. Berzi adds that Edita will invest EGP 120 mn this year, mainly on maintenance, and will decide whether to proceed with the second phase of its newly-opened EO8 factory in 2019 if it sees signs of “decent recovery,” he said.

Al Ghurair Group’s vertically integrated sugar plant in Egypt is the biggest non-oil foreign direct investment transaction in Egypt since the EGP float, Investment Minister Sahar Nasr told Bloomberg. Al Ghurair will put in USD 333 mn of the USD 1 bn project and then will raise its stake to 51% when it is completed in three years. Egyptian companies, including Al Ahly Capital Holding, will hold the remaining stake, Nasr said. She added that “the project will benefit from a tax break for three years because it will be located in Upper Egypt,” Bloomberg notes.

Banque Misr considers lower interest rates on highest-yielding CDs, could scrap them in 2H2018: Banque Misr plans to lower yields on certificates of deposit currently carrying rates of 20% in 2H2018, bank chairman Mohamed El Etreby tells the Creature of the Blue Lag..studios of Ala Mas’oolity. The bank is also mulling over scrapping the highest yielding CDs, as the economy continues to improve, El Etreby added.

CABINET WATCH- The Ismail Cabinet approved yesterday amendments to the Income Tax Law to facilitate procedures for submitting tax declaration forms, according to an official statement. The new procedures will grant a 60-day window after declaration forms are submitted to the Tax Authority for citizens to submit the remaining necessary documents. The move is meant to reduce the rate of incomplete tax declarations.

The ministers also signed off on a draft law regulating billboards on roads and bridges. The law will give us a National Advertising Regulatory Authority to set regulations for the issuance of licenses for new billboards—and to regulate content in the ads they carry. The authority will be headed by the prime minister and its members will include the transport, local development, defense, interior, housing, environment, finance, electricity, and culture ministers.

Also approved during the weekly meeting:

• Beginning procedures for the Egyptian Electricity Transmission Company to sign a contract with Lekela Power for its USD 400 mn, 250 MW wind farm in the Gulf of Suez;
• A presidential decree amending a USD 16 mn grant agreement with the United States for the US-Egypt Science and Technology Joint Fund.

Egypt climbed six spots to rank 14th in Agility’s 2018 Emerging Markets Logistics Index (pdf), which surveys 500 supply chain executives to assess the performance of 50 emerging markets based on their economic, trade, and social data. The surge came thanks to “bold steps” taken to normalize the economy over the past two years, improvements in the country’s infrastructure, a decline in business costs associated with crime, violence, and terrorism. According to the report, Egypt’s economy is on an upwards trajectory, and the “next step is putting in place a robust regulatory environment and continuing with much-needed structural reforms.”