EGP at new low: House plans hearing, meds set to become scarce.

The House of Representatives is expected to hold an emergency meeting today on the FX crunch and the EGP’s significant drops this week (more on that in the Speed Round)

Finance Minister Amr El Garhy is expected to discuss the value-added tax legislation with the leaders of the Federation of Egyptian Industries (more on that in the Speed Round)

The European Bank for Reconstruction and Development, European Investment Bank and the World Bank will launch their joint report What’s holding back the private sector in MENA? at the Conrad Hotel in Cairo. Registration begins at 8:30am CLT, with the first panel starting at 9:00am, including Central Bank Governor Tarek Amer and former Finance Minister Ahmed Galal. Following a break, International Cooperation Minister Sahar Nasr will deliver a keynote speech, followed by a second panel discussion which will include EBRD’s Egypt head Phillip ter Woort.

The Civil Service Act could pass in the House of Representatives as early as today after an article-by-article vote that resumed yesterday. Passage of the measure would represent a hard-won victory for the Ismail government after its first (and so far, really, only) significant clash of horns with the House.

Solar Impulse 2, the solar-powered aircraft that departed Cairo yesterday, is still on the final leg of its around-the-world flight. The aircraft is due to touch down in Abu Dhabi tomorrow. Watch the livestream of the flight here, or visit the homepage for this leg.

House hearings on the value-added tax: Members of the business community will reportedly be invited to a debate tomorrow in the House of Representatives on the proposed VAT.

Interest rates are up for review this week in Egypt, US: The Central Bank of Egypt’s Monetary Policy Committee will meet on Thursday, 28 July to review interest rates. The U.S. Federal Reserve’s Federal Open Markets Committee will meet tomorrow and Wednesday for the same purpose. The Wall Street Journal feels there’s little chance of a rate hike in the US this week, but says the USD will come under pressure as it is “likely [the Fed will] use the meeting as an opportunity to signal that its next move on rates could happen as early as September.”

Hillary Clinton is expected to accept the Democratic party’s nomination on Thursday, the final day of the Democratic National Convention, which gets underway today in Philadelphia.

Reuters’ homepage at dispatch time said it all: “Democrats in disarray ahead of Clinton nomination: The head of the Democratic Party resigned amid a furor over embarrassing leaked emails, hoping to head off a growing rebellion by Bernie Sanders supporters on the eve of Hillary Clinton’s presidential nominating convention. … Trump pulls nearly even with Clinton after Republican convention.”

Dilbert creator Scott Adams and filmmaker Michael Moore both think it’s going to be President Trump: While it has proven to be a fool’s errand for anyone trying to predict the outcomes of this US campaign cycle thus far, we are left agreeing with a number of points made by filmmaker Michael Moore, whose Five Reasons Trump Will Win caused indigestion on lefty Twitter yesterday. The piece runs in a similar vein to Dilbert cartoonist Scott Adams’ compelling Donald Trump will win in a landslide published in March. The gist of both pieces, as expressed by Adams: “[Trump] understands humans as 90-percent irrational and acts accordingly… People vote based on emotion. Period… There are plenty of important facts Trump does not know. But the reason he doesn’t know those facts is — in part — because he knows facts don’t matter… So he ignores them.” Moore largely makes the same point when he writes: “What happened in the UK with Brexit is going to happen here.”

Oh, and the Washington Post formally denounced Trump yesterday on its editorial page: Trump is a unique threat to American democracy.

Between fears of the Zika virus, a horribly polluted rowing / sailing / open-water swim course and the Russian doping scandal, the Rio Olympics are already proving dramatic. The games officially get underway on Friday, 5 August and wrap-up on Sunday, 21, August.

The National Bank of Egypt and Banque Misr began capping foreign currency withdrawals for travelers at USD 500 yesterday, following verbal instructions from the Central Bank of Egypt last Thursday. The two institutions informed their respective branch networks of the cap order, which cut the previous limit of USD 1,000 by half, according to officials from both banks. The order appears to be restricted to these two state-owned institutions as officials from other banks tell Al Borsa that they have received no such order from the CBE. The move is part of a series of limits on pre-travel withdrawals and the use of credit and debit cards abroad imposed by the banking sector to stem the outflow of FX. Al Mal had compiled a table of the limits and restrictions imposed by different banks in Egypt last Wednesday.

House to hold “emergency meeting” as EGP hits another all-time low against the greenback: The EGP continued its downward spiral on Sunday, changing hands for between EGP 12.70 and EGP 12.90 to USD 1 in the parallel market yesterday, Al Masry Al Youm reports. This comes as the CBE continued its crackdown on FX bureaus, slapping the Doctors’ Exchange in Alexandria with a year-long suspension, and bringing the number of shuttered bureaus in recent months to 17. The EGP’s freefall has prompted the House of Representative’s economics and industry committee to call for an emergency meeting today. Market developments are creating panic among MPs, who now view the crisis as a much higher priority than discussions of the budget deficit or the national debt, Al Borsa reports, citing “sources in parliament.”

French shipping conglomerate CMA CGM announced that it will be accepting payment from customers in Egypt only in USD, Al Borsa reports. The company’s decision to charge shipping, loading and unloading fees at Egypt’s ports in USD after previously accepting EGP comes as a result of the company not being able to source FX from Egyptian banks, said Ahmed Sheeha, head of the importers division of the Cairo Chamber of Commerce. The decision will drive costs of shipping up 20-25% for importers in view of conditions in the parallel market, he added. The company operates eight key maritime routes connecting Egypt and Europe, according to Al Borsa. The move is stoking panic among importers that other major shipping lines will follow suit, the newspaper reports.

Brace yourselves for a shortage of meds, Ossama Rostom, the deputy chairman of the pharma chamber, told Al Shorouk, alleging the CBE stopped supplying manufacturers in the sector with foreign currency more than a month ago. Rostom says the central bank is now directing all of its stock of foreign currency to food imports. He expects shortages of chemotherapeutics and cardiovascular agents as well as medical supplies including surgical sutures, warning the situation could deteriorate very rapidly.

Even accounting for the standard hyperbole of industry spokes-types, the warning is a significant red flag and raises the question not of “whether” additional capital controls should be imposed, but “when.” It also has us reading up on El Corralito (forgive us, please, the Wikipedia link, but it’s actually not a bad backgrounder.)

CBE to inject some FX to steel manufacturers? The CBE has reportedly asked banks to outline the FX requirements of their clients in the steel industry, Al Mal said. It also asked for a list of companies that had received access to FX in the past two years. Sources said the central bank could allocate one of its weekly FX auctions, possibly tomorrow’s, to the sector.

EIB in talks to help ease Egypt’s FX crisis: European Investment Bank (EIB) Chief Economist Debora Revoltella sat down for an interview with Daily News Egypt to discuss the results of the MENA Enterprise Survey, a joint report by the EIB, EBRD and World Bank being presented today at an event at the Conrad, as well as the bank’s past and planned projects in Egypt. Aside from the bank’s plans to loan EUR 115 mn for the Gulf of Suez wind farm, one of the more interesting developments to emerge from the interview was Revoltella’s comment that “We [the EIB] are also in talks with Egyptian authorities on how the EIB could help deal with the very acute problem of the foreign currency shortage, where many local businesses have no access or limited access to foreign currency that is needed for usual trade transactions.”

The Investment Ministry has retained NI Capital to advise on plans to float shares of state-owned companies on the EGX as well as international markets, Al Masry Al Youm reported. The programme aims at expanding the ownership base in public companies, Investment Minister Dalia Khorshid says, and that would improve transparency and strengthen corporate governance. NI Capital, a government-owned advisory firm, will engage on two fronts: the first will be a three-month planning stage during which they will partner with local investment banks to set up a preliminary list of companies that could be listed. In phase two, NI Capital will work with the investment banks to set timelines and strategy. Khorshid expects the program to bring in around USD 10 bn over the next three years, Al Borsa says.

And while we’re on IPOs, Amwal Kuwait Real Estate is planning on listing on the EGX in 2017 in search of equity to fuel its expansion in Egypt, sources tell Al Borsa. The company plans to complete listing official procedures and selecting the advisors for the IPO this year. As we noted back in June, Amwal Kuwait is a subsidiary of Kuwaiti-owned Eskan Global Egypt, which itself was eying an IPO in 2017. Amwal Kuwait recently acquired 98% of Universal Company, which owns a resort in Sharm El-Sheikh. The company is interested in buying land in 6 October, New Cairo and the new administrative capital.

First it was GDRs. Now the House wants to probe minority shareholder rights on the EGX? House of Representatives Speaker Ali Abdel Aal is considering approving a request by 20 MPs to form a committee to monitor what he called “the poor management” of the EGX and “the constant losses [incurred by] minority shareholders,” Abdel Aal said, according to Al Mal. No other details of the MPs’ request were given beyond acknowledging that the EGX is run by an independent authority. With the EGX up more than 6% YTD and no recent scandals that stand out in our memories, it’s unclear why the House is suiting-up to do battle on behalf of minority shareholders.

In fact, the Ismail government is already moving on that front: Investment Minister Dalia Khorshid announced back in June that her ministry would amend aspects of the Capital Markets Act on the rights of minority shareholders, while the Egyptian Financial Supervisory Authority changed listing regulations back in April to further protect minority shareholders rights. This is the second time in a week that Parliament has called for a probe of the EGX, with House Economics Committee chairman Ali Moselhy calling for closed-door hearings into the use of GDR trades to obtain FX abroad.

In other EGX news, the Investment Ministry is reportedly considering reversing regulations that force the execution of EGX deal market transactions valued at more than EGP 100K under CBE-approved banks and not brokerage firms, said Mohamed Maher, deputy head of the Egyptian Capital Markets Association (ECMA). These regulations, imposed by EGX Chairman Mohamed Omran in late May, have led to the cancellation of a number of transactions, prompting the ECMA to recommend their reversal to the Investment Ministry. Maher tells Al Borsa that litigation over the decision was unlikely. As we noted back in June, deal market transactions fall under the EGX’s over-the-counter market regulations which govern trading and transfer of the ownership of the companies not listed on EGX and for capital increases of listed companies not yet under the Egyptian Financial Supervisory Authority. Requests for exceptions are presently on a case-by-case basis.

Don’t blame the Eastern Tobacco Company for the cigarette shortage: Eastern Tobacco Company’s daily output has not been reduced and that the company’s pricing has also not changed, the company said, according to Al Masry Al Youm. Public Enterprise Minister Ashraf El Sharkawy is also reportedly following the company’s output levels closely amidst reports of cigarette shortages.

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Mounting criticism of the value-added tax: The Tax Authority is unprepared to enforce the value-added tax (VAT), said Yasser Maharem, secretary general of the Egyptian Taxation Society. 600K new companies or sole proprietorships are expected to register to collect the tax, which will prove challenging for an authority already straining to collect from the existing pool of taxpayers, Maharem said, according to Al Borsa reports. Maharem also criticized the exemption of the film and media industry from the VAT, saying as they are “not crucial” to the average Egyptian. He also suspects the Finance Ministry is downplaying the inflationary impact of the measure. Meanwhile, the good folks at the Importers Division of the Cairo Chamber of Commerce are predicting an inflationary spike of 20% across the board, according to Al Shorouk.

FEI to meet Garhy today; supports VAT, but wants concessions: Finance Minister Amr El Garhy is expected to meet with Federation of Egyptian Industries’ head Mohamed El Sewedy and the head of its taxation committee, Mohamed El Bahay, to discuss industry’s criticism of the VAT, Al Ahram reports. El Sewedy and El Bahay both said that they support the VAT in principle, but will lobby El Garhy to a measure that would exempt companies or sole proprietorships with revenues of less than EGP 500k from collecting the tax. They will also request that the baseline tax rate will be reduced from 14% to 10%

Fate of Tourism and the VAT: Meanwhile, the head of the Egyptian Businessmen Association’s tourism committee, Ahmed Balba, urged El Garhy to exempt the entire tourism sector from the VAT. the committee apparently sent a notice to El Garhy calling for the legislation to be amended accordingly, Balba’ tells Al Mal. While tourism is not mentioned specifically as VAT-exempt, exports are being exempted. By virtue of bringing in FX to the country, tourism could be classified as an export industry. However, Balba’s argument appears to only be the state of the tourism sector at the moment.

Supply Minister Khaled Hanafy hits back: Embattled Supply Minister Khaled Hanafy placed the blame for the debacle over this year’s wheat harvest right back on the House’s doorstep. The ministry attempted to reform the system, but the House of Representatives stood in its way, said Hanafy in an interview on the “Yahduth Fi Masr” talk show on MBC Masr. Hanafy is referencing the wheat subsidy reform program that was adopted back in November, but shot down by the House in February. Under its provisions, farmers would have been paid the average global price for their crop and given a direct EGP 1,300 subsidy per feddan. He singled-out the Blumberg Grain shouna program as an example of how the ministry tried to reform the system, but did not name the company or address allegations the ministry has failed to provide the Blumberg shounas without electricity.

Hanafy said his ministry has opened its own corruption investigation and said public funds have been safeguarded through contracts with silo owners, who can be sued for the missing wheat, and through a EGP 5 bn insurance policy taken out against fraud. Only the courts can decide whether the ministry is corrupt, not the parliament, he stated.

Vote of no confidence coming? It may come to a showdown, as the committee could recommend in its report a vote of no confidence on Khaled Hanafy, committee chairman Magdy Malak said in an interview on the same program immediately following Hanafy. Malak accuses the minister of misrepresenting the facts on this season’s harvest despite relying on “a company which worked with the armed forces” (another reference to Blumberg Grain) to build systems to detect the fraud. Pressed by host Sherif Amer, Malak denied that the committee was singling out the Supply Ministry, adding that Agriculture Ministry officials were also being investigated.

You can view the full episode on MBC Masr’s Shahed portal (Watch in Arabic, run time: 1:11:04; Hanafy’s interview starts at 0:17:40; Magdy Malak’s segment begins at 0:55:10)

Over to Blumberg Grain, where the company apparently requested that the Armed Forces Engineering Authority be the only government body charged with supervising its shouna program and that the Supply Ministry be taken out of the equation, sources tell Al Borsa. These sources, which are not corroborated, said again that Blumberg could pull out of Egypt in favour of expansion in Algeria. Al Borsa had referenced an unnamed source last week who stated that company would exit Egypt by 5 August if problems with electrical supply for its shounas was not resolved. Neither the domestic press nor House investigative committee chairman Malak confirmed whether Blumberg chief David Blumberg testified before the committee yesterday as originally expected.

Could FiT phase two meet the same fate as phase one? There is no chance of the government giving in and allowing international arbitration for any disputes arising from contracts in phase one of the feed-in-tariff program, a senior official at the Electricity Ministry tells Al Borsa. He appears to be massaging facts here, by stating that under Egyptian law, only domestic arbitration is valid. The official then throws a bomb: There could be changes to the program in phase two, but any disputes would likely to be resolved in Egypt, but that is up to the state to decide and not just the ministry. But the show must go on as they say: 12 electrical transformers as part of the transmission infrastructure for phase on projects in Benban arrived in Egypt yesterday. These will be part of four transmission stations which cost EGP 650 mn to build, Al Borsa reports.

Detained Turkish soldiers accused of participating in Turkey’s failed coup earlier this month are “being subjected to beatings and torture, including [redacted], in official and unofficial detention centres in the country,” Amnesty International said on Sunday, citing what it calls credible evidence. “Two lawyers in Ankara working on behalf of detainees told Amnesty International that detainees said they witnessed senior military officers in detention being [readacted] with a truncheon or finger by police officers.” A police officer who wished not to be named in their report said one detainee passed out from his injuries, which appeared to be the result of a beating. The officer heard a police doctor say about the detainee: “Let him die. We will say he came to us dead.”

Front page of pro-government Turkish newspaper names US commander as coup plotter: Turkish political analyst Ilhan Tanir tweeted an image of the front page of pro-AKP newspaper Yeni Safak on Sunday, which names retired US General John F. Campbell as one of the leaders of Turkey’s failed coup. Gen. Campbell does not appear to have served for any period of time at the US’ only military base in Turkey, Incirlik Air Base.

CORRECTION- Singapore’s Hyflux is not involved in the financing of a project to build desalination and power plants at the Suez Canal economic zone. Last Monday, we published a story from Al Shorouk claiming Hyflux was seeking an EGP 1 bn loan from domestic banks for the project. H/t Jenn T.

Keep an eye on EM debt: With inflows into emerging market debt “setting fresh records” (see coverage in the Financial Times or Bloomberg, as you prefer), BloombergView is already fretting about “The Emerging-Markets Debt Time Bomb.” It’s not exactly a story that will make or break Egypt, but any change in sentiment on EM globally will have an impact on us.

It is, ladies and gentlemen, a mercifully slow news day for Egypt in the international press, with the only notable wire story not being terribly notable at all: “Egypt cleric says too much Pokémon Go could be dangerous” from the Associated Press really overplays its hand, quoting an Azharite who says Pokémon could be unsafe to play in the streets. Dude also says it’s not exactly safe to read the Qur’an while walking down (non-existent) Cairo sidewalks, either… Included with the story: A mini photo-essay of a Coptic Egyptian dentist playing Pokémon.

Cybersecurity experts suggest Russians behind leak of 20k Democratic National Committee with aim of damaging Clinton’s presidential campaign: “Can we get someone to ask his belief. Does he believe in God. He had skated on saying he has a Jewish heritage. I think I read he is an atheist. This could make several points difference with my peeps. My Southern Baptist peeps would draw a big difference between a Jew and an atheist.”

The preceding, an apparent but not explicit reference to Bernie Sanders, made by a top Democratic National Committee (DNC) official in an internal memo, was just one of 20k emails allegedly to be attributed to the DNC published by Wikileaks last Friday. The leaks are thought to have the potential to harm the unity of the US Democratic party, resulting in an undermining of former US Secretary of State Hillary Clinton’s presidential campaign, and are already being attributed to yesterday’s resignation (pdf) of DNC chair Rep. Debbie Wasserman Schultz. Defense One’s Patrick Tucker draws on the opinions of a number of cybersecurity experts who point the blame on the leaks on none other than Russia’s intelligence agencies. (Read How Putin weaponized Wikileaks to influence the election of an American president)

The persistent absence of the state: A Coptic home attacked in the village of Saft el Kharsa in Beni Suef on 22 July. A mob of Muslims incensed over the rumor of the alleged construction of a church pelt the home of a Coptic family with rocks. (Watch, running time: 1:51)

Egypt is working on countering “foreign plots” directed at Arab countries, Foreign Minister Sameh Shoukry said. “‘Egypt is seeking to remedy what has been perpetrated against us by foreign forces that have carried out plots, starting with Iraq–as reports in recent days show–that have weakened the state…and opened the door for extremist groups,’ Shoukry told a ministerial gathering of the Arab League on Saturday, Ahram Online reported.

Meanwhile, President Abdel Fattah El Sisi tasked Prime Minister Sherif Ismail with attending the Arab League Summit in his stead, Al Mal reports.

Trafigura, Royal Dutch Shell, Rosneft, and PetroChina were awarded tenders to supply EGAS with a total of 11 LNG shipments between the months of June and August, sources told Al Borsa. Trafigura is supplying five shipments, followed by Shell with three, Rosneft with two, and PetroChina with one. As we had previously reported, EGAS has issued a tender for a third FSRU to meet domestic demand as the three Siemens power plants come online soon.

The Supply Ministry is set to issue a tender to import 100k tonnes of raw sugar to meet domestic demand, sources told Al Mal. Grocers Syndicate Spokesperson Maged Nadi recently said there was a shortage of staple commodities, particularly in Al Gharbiya, where grocers refused shipments of brown sugar. The strategic reserves of sugar will run out in October, the source added, noting that the tender will import sugar to the Sugar and Integrated Industries Company (SIIC) who will only refine the sugar, but not finance the purchase. The Supply Ministry has EGP 4 bn in debt to SIIC on account of supplying their entire production to the ration cards system.

Heliopolis Company for Housing & Development has opted to delay vacating the Merryland park on the police’s recommendation due to “security concerns”, according to a bourse statement. Heliopolis Housing was looking to enforce a court order and evict from the plot from current tenant, Magic Dreams. Heliopolis Housing has already begun tendering parts of the park for development, although Magic Dreams is still operating as normal and even sought a EGP 350 mn loan to develop the area.

Abraj Misr for Urban Development has paid EGP 220 mn to the Export Development Bank of Egypt for land on which it is building a project known as “The Jet” bringing the total paid to EGP 600 mn out of EGP 800 mn, Al Borsa reported.

JWT will only begin a promotional campaign for tourism in Egypt in Russia and the UK once travel restrictions to Egypt are lifted, Al Borsa reported. The company halted the campaigns in the two countries following the crash of the Metrojet flight in Sinai as maintaining them would have been a “waste of public funds.” JWT’s Chairman said the company received only 6% of its dues from the Egyptian government as the campaigns were put on hold. He added that the company is also facing challenges in Italy with challenges following the Regeni case. Part of the plan now is to capitalize on the tourists who are currently shying away from the Turkish market.

The conditions set for the sale of Orange Egypt’s full stock in the Egyptian Company for Mobile Tower Services to Eaton Towers were not met by the 21 July deadline, Orange said in a statement, Al Borsa reports. The company has decided against extending the deadline and effectively cancelled the agreement.

Minister of Communications and Information Technology Yasser El Kady signed memorandums of understanding to establish a telecommunication services center and a network security center in an unspecified technology zone during his meeting with a delegation from state-owned China Electronics Technology Group (CETC), according to Al Mal. CETC is also reportedly exploring investment opportunities including a solar power plant and a lithium battery plant.

Naeem Holding for Investment is looking to acquire an additional 9% stake in the Smart Village Company (SVC) by acquiring shares from Technoram Holding, sources tell Al Mal. Naeem currently holds 17.76 % of SVC after increasing its stake just earlier this month. A Naeem subsidiary has previously said it is interested in building a mixed-use housing and commercial complex in Smart Village with Palm Hills.

EgyptAir has passed the Star Alliance annual inspection EgyptAir Holding Company Chairman Safwat Mosallam told Al Shorouk. The inspection included evaluating Terminal 3, the administrative building, on the ground services, baggage handling, promotion, marketing, and the call center among several other criteria.

Al Ahly Bank of Kuwait has bought out outstanding shares and minority interest in Piraeus Bank Egypt, completing its mandatory tender offer, according to an EGX statement on Sunday.

Ihab Abdel Rahman, one of Egypt’s potential medal winners in the Rio Olympics’ javelin competition, might not be allowed to compete after a sample of his tested positive for a banned performance-enhancing substance. Abdel Rahman’s first sample reportedly tested positive for testosterone and the National Anti Doping Organisation is currently awaiting the results of a second sample, Al Masry Al Youm reported. Abdel Rahman most recently won the second place in the 15th IAAF World Championship in Beijing in August 2015.