The good times will continue to roll if Egypt secures a new pact with the IMF: Plans to sign a post-program non-financial agreement with IMF will help Egypt maintain its position as the world’s most attractive carry trade, Mohamed Abu Basha, EFG Hermes’ head of macro analysis, tells Bloomberg. Finance Minister Mohamed Maait said yesterday that the government is in talks with the fund over an agreement that could see it continue to support the country’s economic reforms after the USD 12 bn program ends later this year. This would likely bolster investor confidence in Egypt’s fixed-income assets and the EGP carry trade further, according to Abu Basha. “Egypt makes for a very good trade… signing the agreement would act as further reassurance and can guarantee a consistent stream of inflows and lower borrowing costs,” he said.

The world’s best: Large portfolio flows have entered Egypt this year as the government’s commitment to reform and the country’s relative insulation from the US-China trade conflict courted international attention. Investors have netted themselves a 23% return on EGP-denominated bonds this year — five times the EM average — while the value of the EGP has increased by 7.3% against the greenback. Carry traders investing in Egyptian debt with USD have made returns of around 15% in 2019, Bloomberg says.

And Trump’s USD 50 bn Mideast plan (if it ever materializes) will likely boost the EGP further: Marie Salem, FFA Private Bank’s director of capital markets, says that Trump’s plan to invest USD 9 bn in Egyptian infrastructure as part of his regional economic development plan would only be good news for the EGP. “With all the enhancement and support that Egypt is getting from the IMF and the US, the EGP has maintained its stability for the past year and we expect it to strengthen,” she told Bloomberg.