{"id":585770,"date":"2023-04-30T00:00:00","date_gmt":"2023-04-30T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/04\/30\/egypt-will-not-default-says-madbouly-amid-investor-pessimism-on-debt-outlook\/"},"modified":"2023-04-30T00:00:00","modified_gmt":"2023-04-30T00:00:00","slug":"egypt-will-not-default-says-madbouly-amid-investor-pessimism-on-debt-outlook","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/04\/30\/egypt-will-not-default-says-madbouly-amid-investor-pessimism-on-debt-outlook\/","title":{"rendered":"Egypt will not default, says Madbouly amid investor pessimism on debt outlook"},"content":{"rendered":"

Good morning, wonderful people, and welcome to the final workday of April. <\/span>That means about 32.6% of the year has passed. The upside: We have about 246 days left to hit our budgets. <\/span><\/p>\n

<\/a> <\/span>PSA- It\u2019s another short work week. <\/span>Thursday, <\/span>4 May is of<\/span>f in observance of Labor <\/span>Day, the Manpower Ministry confirmed in <\/span>a statement<\/a><\/span> Thursday.<\/span><\/p>\n

<\/span>THE BIG STORY here at home: <\/span>Egypt will not default, says Madbouly.<\/span> Prime <\/span>Minister Moustafa Madbouly moved yesterday to reassure international markets about the sustainability of Egypt\u2019s debt <\/span>amid concerns among some investors that Egypt faces a rising risk of default. \u201cI reassure you that the Egyptian state has not failed, nor will it fail, to pay back its international debt,\u201d he said in televised <\/span>statements<\/a><\/span> (<\/span>watch, runtime: 29:40<\/a><\/span>). \u201cEgypt respects its financial obligations \u2026 so far we have never delayed a debt payment.\u201d<\/span><\/p>\n

Madbouly\u2019s comments come following a tough week in the markets:<\/span> The sell-off of Egypt\u2019s <\/span>USD bonds accelerated last week as foreign investors continued to take a dim view of the country\u2019s debt outlook. The sell-off was aggravated by S&P Global Ratings\u2019 decision to <\/span>cut its outlook<\/a><\/span> on Egypt\u2019s credit rating last week, which said that a lack of progress on privatization and reform was putting the country\u2019s ability to meet its external funding needs in jeopardy. <\/span>Moody\u2019s jumped in last Wednesday, writing in a note that slow progress on the state\u2019s asset sale program is contributing to \u201cdownside risk to Egypt\u2019s debt affordability and debt sustainability profile.\u201d<\/span><\/p>\n

Madbouly signaled we can expect asset sales by the end of June<\/span>, saying<\/span>his <\/span>government will start selling off state assets to private-sector investors before the end of the current fiscal <\/span>year. The government is aiming to raise up USD 2 bn from asset sales by June, Madbouly said. That\u2019s <\/span>on par<\/span> with the <\/span>USD 2.5 bn<\/span> June 2023 target to which we\u2019ve committed in our loan agreement with the IMF.<\/span><\/p>\n

More companies (including military-owned) to join the program: <\/span>\u201cThe state will not back <\/span>down from the privatization program \u2026 there are more companies joining,\u201d he said, adding that <\/span>the state is preparing over 10 military-owned companies for offering. President Abdel Fattah El Sisi <\/span>suggested earlier this year<\/a><\/span> that more military firms could be earmarked for privatization. CI Capital has been marketing bottled drinks firm Safi and fuel retailer Wataniya <\/span>to strategic investors<\/span> since the middle of March, <\/span>but has made no public comment on the state of the transactions. <\/span><\/p>\n

The government <\/span>announced its rebooted, 32 company program<\/a><\/span> in February.<\/span> Talks with Gulf sovereign wealth funds on the sale of stakes in United Bank and Telecom Egypt have apparently fallen through amid expectations for a further currency devaluation. Other reports have suggested that our Gulf allies want to see more progress on reforms before investing.<\/span><\/p>\n

Could this change now that we\u2019re past Eid?<\/span>Several press reports<\/a><\/span> recently suggested that <\/span>we could move towards the first sale after the Eid break. One unconfirmed report claimed the <\/span>sale of United Bank was imminent, while the Public Enterprises Ministry is expected to soon publish the tender booklet for the project to refurbish Cairo\u2019s historic Continental Hotel. <\/span>Our friends at the Sovereign Fund of Egypt, meanwhile, have taken <\/span>a portfolio of seven five-star hotels to market<\/a><\/span>. <\/span><\/p>\n

<\/span><\/p>\n

\n

<\/span>Subsidized commodities are about to get pricier: <\/span>The government will start <\/span>gradually raising the prices of commodities sold to ration card holders, Supply Minister <\/span>Ali El Moselhy said during a presser yesterday (<\/span>watch, runtime<\/a><\/span>: 34:06<\/a><\/span>). The price review will start \u201cin the coming days,\u201d the minister said, adding that without raising prices \u201cthe government will not be able to fund or provide these commodities.\u201d <\/span><\/p>\n

Food prices are rising at a record rate:<\/span>Inflation jumped 32.7% y-o-y<\/a><\/span> in March as prices <\/span>continued to accelerate on the back of the series of currency devaluations, the foreign-currency crunch, and higher fuel prices. <\/span><\/p>\n

ALSO FROM THE PRESSER- Egypt has 2.6 months\u2019 worth of wheat in strategic reserves<\/span>, <\/span>El Moselhy said. The Madbouly government has so far bought 365k tons of wheat during this year\u2019s local harvest, he said. The country has strategic reserves of meat sufficient for 7 weeks, he added.<\/span><\/p>\n

AND- Customs exemptions for gold imports? <\/span>The Supply Ministry is working on a proposal <\/span>that would allow <\/span>Egyptians living abroad<\/span> to import gold to Egypt without paying customs duties in a bid to help stabilize the gold market, <\/span>El<\/a><\/span>Moselhy<\/a><\/span>said<\/a><\/span>. Local gold prices have more than doubled over the past year <\/span>amid the ongoing foreign exchange crunch.<\/span><\/p>\n

MORNING MUST-READ- <\/span><\/p>\n

<\/a> <\/span>Yuval Noah Harari is really freaked out about AI. <\/span>The <\/span>Sapiens<\/a><\/span> author (particularly popular <\/span>among guys over the age of 35 here in Omm El Donia) writes cogently in the Economist that artificial intelligence has \u201chacked the operating system of our civilisation\u201d by having \u201cgained some remarkable abilities to manipulate and generate language, whether with words, sounds or images.\u201d<\/span><\/p>\n

His starting point: \u201cWe have just encountered an alien intelligence, here on Earth. We <\/span>don\u2019t know much about it, except that it might destroy our civilisation.<\/span> We should put a halt to the irresponsible deployment of AI tools in the public sphere, and regulate AI before it regulates us. And the first regulation I would suggest is to make it mandatory for AI to disclose that it is an AI. If I am having a conversation with someone, and I cannot tell whether it is a human or an AI\u2014that\u2019s the end of democracy.\u201d Read <\/span>Yuval Noah Harari argues that AI has hacked the operating system of human civilization<\/a><\/span>. <\/span><\/p>\n

HAPPENING TODAY- <\/span><\/p>\n

<\/a> <\/span>The House <\/span>is back from its Eid vacation: <\/span>MPs will spend their first day <\/span>back debating and then voting on a bill <\/span>regulating the possession of dangerous animals and dogs<\/a><\/span>. The bill would introduce new controls on personal dog ownership, measures to contain the spread of stray animals, and regulations on the possession of dangerous animals. <\/span>The bill has momentum after considerable media attention last month to a pitbull attack. <\/span><\/p>\n

Among the House committee meetings today<\/span>: <\/span><\/p>\n