{"id":607600,"date":"2023-10-06T00:00:00","date_gmt":"2023-10-06T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/10\/06\/a-whole-lot-of-economic-updates-and-downgrades-presidential-nominees-rolled-in\/"},"modified":"2023-10-06T00:00:00","modified_gmt":"2023-10-06T00:00:00","slug":"a-whole-lot-of-economic-updates-and-downgrades-presidential-nominees-rolled-in","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/10\/06\/a-whole-lot-of-economic-updates-and-downgrades-presidential-nominees-rolled-in\/","title":{"rendered":"A whole lot of economic updates and downgrades + Presidential nominees rolled in"},"content":{"rendered":"

Good morning, friends. <\/strong> We hope your second consecutive long weekend \u2014 but the last one of 2024 \u2014 is so far getting off to a relaxing and enjoyable start. Despite the brevity of the week, we were dealt a slew of news and updates.<\/p>\n

\u2026BEFORE WE GET UNDERWAY, A MEA CULPA- <\/strong> In last week\u2019s Enterprise Guide, we had the incorrect link for the LinkedIn profile of Iman Mostafa, founder of Hazel Farm. We\u2019ve updated the story with the correct link<\/a> in our web edition, and we apologize for the error. <\/p>\n

Spending long hours at your desk has a myriad of downsides, making it important to make conscious decisions to counteract a sedentary lifestyle. <\/strong>This weekend, we bring you a guide on how to make your office space work for you and help you start moving out of your chair to make you more productive and improve your well-being. <\/p>\n

Enterprise Weekend comes out each Friday at 9:00am CLT. <\/strong> We\u2019ll be back on Sunday at 6am with EnterpriseAM. Until then: Enjoy the weekend.<\/p>\n

LAST WEEK IN 3 MINS- <\/strong><\/p>\n

We had a macro-heavy news week with mounting pressure from external debt obligations <\/strong> and the FX crunch <\/strong> dimming international financing institutions and ratings agencies' expectations of Egypt\u2019s economic performance next year. A handful of privatization updates, some investment news, and preparations for December's presidential elections have also kept us busy.<\/p>\n

ECONOMY- <\/strong><\/p>\n

#1- EBRD cut its 2024 Egypt growth forecast: <\/strong> The European Bank for Reconstruction and Development (EBRD) cut its Egypt growth forecast<\/a> for 2024 by 0.7 percentage points to 4.5%. <\/p>\n

#2- Morgan Stanley adopted <\/strong>a negative outlook<\/a><\/strong> on our debt <\/strong> due to concerns about our financing gap and uncertainty about how we\u2019ll roll out reforms required by our USD 3 bn agreement with the IMF.<\/p>\n

#3- <\/strong> Italy\u2019s Intesa Sanpaolo cut its 2023 and 2024 growth forecasts for Egypt <\/strong>due to the country\u2019s ongoing economic crisis. The lender now expects<\/a> the economy to grow at a 3.4% clip this year, down from its 4.1% forecast in June, and 3.9% in 2024, down from 5.5%.<\/p>\n

#4- Contraction in Egypt\u2019s non-oil private sector deepened in September <\/strong> as the impact of successive currency devaluations caused a sharp fall in output, according to S&P Global\u2019s latest PMI figures<\/a>. The index slipped to a four-month low of 48.7 from 49.2 in August .<\/p>\n

#5- We\u2019re going to have to repay almost a fifth of our total external debt obligations in <\/strong> 2024 alone. <\/strong> Egypt will likely have to spend USD 29.2 bn on debt repayments<\/a> in 2024 \u2014 USD 10 bn more than our expected debt servicing bill for this year and over USD 1 bn more than we previously expected. <\/p>\n

#6- Egypt\u2019s net foreign asset position <\/strong>improved marginally<\/a><\/strong> in August to negative USD <\/strong> 25.9 bn <\/strong> from negative USD 26.3 bn the previous month. This marks the second consecutive month that net foreign liabilities have fallen after reaching a record high of USD 27.1 bn in June.<\/p>\n

#7- Egyptian and Emirati central banks reached a currency swap agreement worth almost <\/strong> USD 1.4 bn. <\/strong>The Central Bank of Egypt (CBE) will be able to obtain up to AED 5 bn (USD 1.36 bn) in exchange for EGP 42 bn under the agreement<\/a>.<\/p>\n

ELECTIONS 2023- <\/strong><\/p>\n

#1- El Sisi will seek a third term in office: <\/strong>President Abdel Fattah El Sisi announced his<\/a> candidacy<\/a> for December\u2019s presidential election on Monday on the final day of the \u201cStory of a Homeland\u201d conference.<\/p>\n

Three other candidates are almost in the race: <\/strong>The Al Wafd Party\u2019s Abdel Sanad Yamama, the Egyptian Social Democratic Party\u2019s Farid Zahran, and the Republican People\u2019s Party Hazem Omar, all secured the required endorsements from members of Parliament earlier this week.<\/p>\n

And two others are awaiting qualification: <\/strong>Former MP Ahmed Tantawi and head of the Dostour Party Gameela Ismail are also trying to collect signatures to get onto the ballot.<\/p>\n

PRIVATIZATION WATCH- <\/strong><\/p>\n

#1- Midar could go up for an EGX listing in 1H 2024<\/strong>: The Sovereign Fund of Egypt (SFE) is reportedly preparing<\/a> to list state-owned real estate firm Midar on the EGX in 1H 2024. Earlier this year, the SFE added Midar to its pre-IPO fund. It was previously reported in July that the SFE could offer 25-30% of the company to a strategic investor before eventually taking it public on the EGX. <\/p>\n

\u2026Banque Misr and the NIB could be letting go of their stakes<\/strong>: Banque Misr and the National Investment Bank \u2014 which together own almost 75% of the company \u2014 could be fully exiting Midar, leaving Banque Misr\u2019s investment arm Misr Capital (5.65%), the National Bank of Egypt (8.9%) and Arab Contractors (10.94%) as the remaining shareholders. <\/p>\n

#2- Another plastics manufacturer could be up for grabs: <\/strong> The government is looking to<\/a> offload<\/a> 10-15% of its 22% stake in state-owned thermoplastic producer Egyptian Propylene and Polypropylene (EPP) to a foreign investor. An unnamed privately-owned Saudi company has reportedly expressed interest in acquiring shares.<\/p>\n

INVESTMENT WATCH- <\/strong><\/p>\n

#1- FDI inflows were up 10% y-o-y in FY 2022-2023, <\/strong>General Authority for Freezones and Investment (GAFI) CEO Hossam Heiba said<\/a>. While no exact figures were provided, based on our math, a 10% uptick should put us around USD 9.8 bn. <\/p>\n

#2- We have a USD 350 mn Chinese waste recycling project on the horizon: <\/strong>A Chinese recycling company is in talks with GAFI to launch a recycling project with an investment of up to USD 350 mn<\/a>. <\/p>\n

DEBT WATCH- <\/strong><\/p>\n

#1- The Export-Import Bank of China is lending Egypt USD 400 mn to finance the third <\/strong> phase of the electric light rail train (LRT). <\/strong> The loan would finance completion of the delayed project<\/a>.<\/p>\n

#2- Edita is getting USD 45 mn from the IFC: <\/strong> The International Finance Corporation (IFC) signed off on a USD 45 mn loan<\/a> to baked goods producer Edita Food Industries to finance regional and domestic growth. <\/p>\n

#3- <\/strong> Contact Financial Holding closed a EGP 1.5 bn <\/strong>securitized bond issuance<\/a><\/strong> for subsidiaries in its consumer finance portfolio, including Contact Credit.<\/p>\n

#4- Al Ahly Capital Holding\u2019s microfinance arm <\/strong>raised EGP 707 mn<\/a><\/strong> in a securitized bond <\/strong> issuance. <\/strong> Al Ahly Pharos Investment Banking said that the bond was backed by a EGP 787 mn portfolio from Al Ahly Tamkeen Microfinance and issued by Al Ahly Securitization Company.<\/p>\n

OVER IN PARLIAMENT- <\/strong><\/p>\n

#1- The House is back in session\u2026 <\/strong>The House of Representatives reconvened on Sunday<\/a> for its fall legislative session where it is set to discuss a raft of new government-drafted laws that include raising the minimum wage-tax exemption and extending the expat car import initiative.<\/p>\n

\u2026as is the Senate: <\/strong> Senators reconvened on Tuesday<\/a> after the two-month summer recess with committee elections top of the agenda. <\/p>\n

#2- <\/strong> House committee election results are already in: <\/strong> The pro-government Mostaqbal Watan party dominated proceedings<\/a>, securing the leadership of a bulk of the chamber\u2019s 25 committees.<\/p>\n

WHAT\u2019S HAPPENING NEXT WEEK- <\/strong><\/p>\n

<\/p>\n

Capmas and the CBE will publish last month\u2019s inflation data next Tuesday, 10 October. <\/strong>Annual urban inflation has been accelerating for the past several months, hitting an all time high of 37.4% in August.<\/a> <\/p>\n

The government is also set to announce new measures aimed at curbing soaring prices <\/strong> of basic goods next week<\/strong>. \u201cWe will work together to ensure that there is an abundance of various commodities in the markets, which will contribute to lower prices, especially food commodities,\u201d Prime Minister Moustafa Madbouly said<\/a> following a meeting with officials last week.<\/p>\n

Also happening next week <\/strong> : <\/strong><\/p>\n