Abdel Aal as Principal Skinner: Pay attention or I’ll turn on the scramblers.

There’s no word yet on the report from the House committee investigating fraud in this year’s wheat harvest, which was supposed to have been submitted to the House Speaker yesterday. Amid the delay, Supply Ministry spokesman Mahmoud Diab was forced to deny rumors that Supply Minister Khaled Hanafy had resigned. Members of the investigating committee have not been shy about placing responsibility for what they see as widespread corruption in the harvest at Hanafy’s doorstep. MPs have also called his integrity into question by accusing him of misappropriating state funds to stay at the Semiramis Intercontinental.

Pharma sector regulator coming? “There is an urgent need to bring to light a ‘pharmaceuticals authority’ to better regulate the sector,” said Essam El Qady, a member of the House Health Committee. El Qady said the House will take today an “important decision” to address the nationwide shortage of medication, which he said persists despite manufacturers having been granted permission by Cabinet in May 2016 to hike prices on products under EGP 30.

VAT vote, delayed wheat investigation report and now talk of a pharma sector regulator? Don’t these people want to cut us a break and go on summer recess?

On a thankfully a slow news night day, we bring you “Chronicles of a Substitute Teacher” (or: “The Life and Times of the Speaker of the House”): House Speaker Ali Abdel Aal does not get the credit he deserves for babysitting the House (when he is not calling for the extermination of FX traders, that is). Two of his most memorable lines yesterday, as reported in the domestic press: “If everyone gets a chance to talk, we won’t be done over here” and “Stop talking on your phones or I’ll turn on the scrambler”. Eat your heart out, Principal Skinner. We can imagine his drawer filled with confiscated slingshots and the back of his chair peppered with spitballs. These are the “elected representatives” working on legislation key to our economic future, ladies and gentlemen.

We’re DFL (or nearly so). Egypt finished the Rio Olympics ranked number three — by greatest number of last-place finishes, according to the Wall Street Journal (paywall). Brazil had the greatest number of last-place, second-to-last and third-to-last finishes, followed by Australia, Egypt, Japan and the United States. Egypt had 23 finishes in the bottom three to Australia’s 29 and Brazil’s 45.

MPs could vote on the value-added tax legislation as early as Sunday, 28 August, according to reports in the domestic press. The House has yet to officially confirm a date for the vote.

State visit to China: President Abdel Fattah El Sisi is expected to sign bilateral agreements worth several bn USD while in China on 4-5 September for the G20 meeting.

Start planning your escape today: Eid Al-Adha starts sometime around Sunday, 11 September, with consensus being the waqfa is either the Saturday or the Sunday. CBE won’t let banks stay closed the full week, so odds are good the Thursday will be a workday.

Michael Bolton is coming to Egypt in October. No, not the guy from Office Space. We meanMichael Bolton, the singer. H/t Samuel S.

House Budget Committee declines to set a VAT rate: The House of Representative’s Planning and Budget Committee has passed the buck, voting to send its report on the Ismail government’s proposed VAT bill to the House as a whole without a recommendation on what the VAT rate should be, said committee deputy chair Yasser Omar.

That sets up two scenarios: The House could legislate a baseline VAT rate — or it could empower the Finance Ministry or to do so when the latter hands down the VAT Act’s executive regulations.

The decision followed a contentious debate between committee members and Finance Minister Amr El Garhy yesterday, who continued to push for a 14% VAT rate. MPs opposed to the rate (and keen on self-promotion) said they expect the VAT to be inflationary, arguing the poor can ill-afford another price hike after the recent rise in electricity prices and the pending phase-out of other energy subsidies. El Garhy pointed out that lowering the rate would adversely impact planned expenditure on health, education and other subsidies from which low-income earners will benefit, not to mention shielding them from most of the VAT’s inflationary effects through the exemptions list. Despite winning over some MPs including the committee’s head, Hussein Eissa, other MPs remained unconvinced, resulting in deadlock at the committee level, Al Shorouk reports. Omar had stated on Saturday that the committee would recommend a 12-13% rate.

Emphasis on enforcement: El Garhy, who was accompanied by Deputy Finance Minister Amr El Monayer, promised to tighten supervision to ensure merchants do not abuse the tax, Al Borsa reports.

Medication and vehicles for the disabled have been included on the exemptions list after haggling with El Garhy, said the House Budget Committee’s Omar. The committee had apparently tried to also add textiles in the mix but the Finance Minister shot that down. Cabinet and MPs have long agreed that healthcare services would be VAT-exempt, but medications were not before yesterday.

Egypt plans to issue eurobonds sometime at the end of September or early October and is expecting the bonds to carry a yield of 5.5-6%, deputy Finance Minister Ahmed Kouchouk told Reuters. The eurobonds will also carry maturities of five-to-ten years. “If we find great appetite and demand from investors for this issuance and at appropriate prices then we could increase the amount issued and we can lower the cost of the issuance if the interest rate prices offered are high," Kouchouk added. Alan Cameron, a London-based economist covering frontier markets at Exotix Partners, had said he expects Egypt to pay 6-7%. The issuance will be lead managed by JPMorgan, Citi, BNP Paribas, and Natixis.

Are you paying attention to this, local MNOs? Kuwaiti telecom operator Zain Group has reportedly submitted an official offer to acquire a 4G licence in Egypt and is ready to pay the full price in USD in a single installment, Al Mal reports. The paper adds that China Telecom and Saudi’s STC have also expressed interest in entering the Egyptian market, but are yet to submit official offers. All offers will be considered, the CIT Ministry said, noting that even if they are not granted network licences, there is scope for the foreign network operators to participate in other projects including developing telecom infrastructure. The government had said previously it will offer 4G licences to international bidders if local MNOs do not bid for them. The extended deadline for MNOs to bid for 4G licences is 22 September.

Is Dalia Khorshid interceding on behalf of FiT investors? Investment Minister Dalia Khorshid met with Electricity Minister Mohamed Shaker to discuss ways around obstacles in feed-in tariff agreements that are scaring off investors in renewable energy. Among the sticking points: the state’s insistence on domestic arbitration and requiring that 85% of project funding be sourced from foreign lenders. The two also talked about phase two of the FiT program, the details of which are expected to be announced this week, Al Borsa reports. Neither ministry released an official readout on the meeting. As many as 20 companies have said they are canceling solar power projects under the FiT or are considering doing the same. As we noted yesterday, the backlash has reportedly prompted the Ismail government to considering allowing international arbitration.

White good manufacturer Electrolux will invest another EGP 1.5 bn in Egypt, bringing the company’s total investments here to EGP 4.0 bn, Chairman Dan Arler told Al Masry Al Youm. The company intends to turn Egypt into a regional industrial hub and will look to upgrade and expand its production facilities. Electrolux acquired Olympic Group in 2011.

The Official Gazette published the changes to the Banking Law which impose harsher jail terms and fines on traders on the parallel market, making it officially the law of the land, Al Ahram reported. As we noted a few weeks back, the House of Representatives voted into law the amendments recommended by the Central Bank of Egypt, which will see jail terms rise to 3-10 years from a previous minimum of one year and fines capped at EGP 5 mn. The move was looked at unfavorably by the IMF delegation during its talks with the government.

Egyptian strawberries linked to hepatitis A scare in the US: Several recent cases of hepatitis A in Virginia may have been caused by frozen strawberries imported from Egypt and used by the Tropical Smoothie Cafe chain. The smoothie chain said in a statement: “Egyptian strawberries represent a fraction of our overall strawberries purchased, and were predominantly distributed to stores in the Virginia market… However, in an abundance of caution, we voluntarily pulled all strawberries sourced from Egypt from every cafe in our system, not only the Virginia cafes.”

…The Trade and Industry Ministry in Egypt is waiting for official confirmation that the hepatitis A cases were indeed caused by Egyptian strawberries to take action and review the export process, Al Borsa reported.

The Russian State Duma is discussing sending a trial flight to Cairo that would carry a team of experts who would run final security tests, the speaker of the Duma’s committee on transportation said in a TV interview carried by RT Arabic. The results of the trial flight could result in the resumption of regular flights between the two countries, he added.

El Sisi interviewed by state newspapers on foreign policy: President Abdel Fattah El Sisi sat down with the “big three” state-owned dailies for a talk through foreign policy issues. The extensive interview is front-page news this morning in Al Ahram, Al Akhbar, and Al Gomhouria and is the president’s first extensive interview on foreign policy with the domestic press in some time. Since assuming office, El Sisi has led a multi-polar foreign policy that has moved Egypt beyond the traditional positioning as a “trusted interlocutor between Israel and Palestine.” The country has diversified arms suppliers (diluting the United States by adding Russia and France to the list), re-engaged with Africa in general (and, critically, the Nile Basin countries), deepened ties with Europe and returned the relationship with China to a strategic partnership, among other developments. It’s also weathered crises including the furor in Italy, a key trade partner, over the murder of graduate student Giulio Regeni and the downing by terrorists of a flight operated by Russian airline Metrojet over the Sinai.

On relations with Russia, El Sisi said final contracts for the Daba’a will be signed with Russia before the end of the year, explaining that ongoing discussions are focused on the fine print. The president, who characterised bilateral relations as “strong,” also spoke of his hope that Russian tourists would soon return to Egypt

Speaking on the maritime border demarcation treaty which ceded control of Tiran and Sanafir to Saudi Arabia, El Sisi framed the agreement as part of wider policy on the need to cooperate on extracting mineral resources. With Saudi Arabia, the move will see joined effort to extract resources from the Red Sea in a manner similar to the treaty with Cyprus, which the president positioned as having “given” Egypt the Zohr field. “Our relationship with Saudi Arabia runs deeper than the aid they provide us,” El Sisi added.

The interview also focused on the ongoing talks with Ethiopia and Sudan on the technical studies for the Grand Ethiopian Renaissance Dam, which the President said were progressing well. He urged the public to remain calm on the issue stating that “the Nile will continue to flow to Egypt” and the Nile basin countries have given reassurances on that. He added that Sudan’s president Omar Al Bashir is set to visit Egypt in October. The interview briefly talked about the Palestinian-Israeli peace initiative and ties with the US.

MOVES- The World Bank has accepted the Egyptian Ministry of Foreign Affairs’ nomination of Ragui El Etreby for the position of alternate executive director, the ministry said in a statement. El Etreby was previously the director of the office of the foreign minister and has served as President Abdel Fattah El Sisi’s personal representative to the G20 meetings.

MOVES- Oil Minister Tarek El Molla has appointed Aiman El Sa’ai as Chairman of the Egyptian Company for Mineral Resources, Al Masry Al Youm reported. El Sa’ai was previously the general manager of follow-up on subsidiary companies at the Egyptian Mineral Resources Authority.

**Earnings Watch: Among the companies that have recently reported earnings:

• Beltone Financial reported 1H2016 consolidated net profit of EGP 4.17 mn, down from EGP 10.73 mn recorded in the same period last year, according to a bourse statement.
• Cairo Housing and Development recorded 1H2016 consolidated net profit worth EGP 58.1 mn, declining from EGP 91.58 mn in 1H2015, as reported in an EGX statement.

Sorry, Zamalek, you’re getting a Metro stop whether you want it or not: The not-in-my-back-yard set lost a battle yesterday as the Transport Ministry confirmed that it will not change its plan to build a Cairo Metro station in Zamalek, Transportation Minister Galal Saeed told Al Shorouk. Zamalek residents had complained that drilling from the construction of the proposed station would impact the structural soundness of old buildings on the island and change the “nature of the district.” A lawsuit lodged by residents with the Administrative Court is scheduled to be heard on 18 October. A former ministry spokesman had confirmed late last year that the ministry would move the station to the periphery of the island, placating the concerns of some residents. The ministry is set to launch the third phase of Cairo Metro Line Three within two months, with the project expected to be completed within four years, said Saeed.

Look for some hand-wringing over the state of the global economy this week as central bank governors from around the world prepare to gather on Thursday in Jackson Hole, Wyoming, for a three-day retreat to discuss monetary policy and the economic outlook. The agenda for the gathering (background here) won’t be out until the wee hours of 26 August (Cairo time), but US Fed Chairwoman Janet Yellen is already confirmed as speaking on Friday. Cue the global business press, which is sifting the tea leaves to see whether we can expect Yellen to hint at prospects for a fall rate hike. The WSJ (here and here, paywall) and the Financial Times (paywall) have the gathering as front-page news on their digital editions this morning. And CNBC is beating the drum heavily this morning.

Barron’s(paywall) notes that the USD 12 bn, three-year IMF facility will, if passed, “improve the outlook for the country’s stocks and bonds.” Noting that both Egypt and the IMF have had a lot of bad press of late, the magazine writes that with President Abdel Fattah El Sisi “confident in his power … the unpopular restoration of fiscal sanity may take this time, experts think. ‘It’s less about the IMF money and more about the policy,’ says Anthony Simond, an emerging markets manager at Aberdeen Investment Management in London.” The Van Eck Vectors Egypt Index ETF is up 8% since IMF talks gained momentum, but Alison Graham, chief investment officer at New York–based frontier markets specialist Voltan Capital Management, tips CIB and Oriental Weavers, citing Van Eck’s limited liquidity.

The kicker: “Long-term, Egypt bulls see the basis for an emerging-markets tiger, should authorities get their policy act together,” the magazine notes, going on to recap the usual drivers: large population, gaps in basic goods and services (90% unbanked…), and promising offshore natural gas finds. “Amid all its chaos, Egypt’s GDP grew by 4.2% last year and should expand more than 3% this year, the World Bank predicts. ‘There’s a lot of grounds for optimism given the country’s natural endowments,’ says Jean-Paul Pigat, senior economist at Emirates NBD in Dubai.” H/t Hisham E.

For Egypt, the IMF is acting like a management consultant, recommending reforms like subsidy removal that would “makes things cheaper,” Tim Worstall writes for Forbes. The Fund, in this mythical arrangement, is not to tell the state what it should do, but rather it’s that the consultant’s report tells the workforce what the management already knows it must do.” Worstall takes an unabashedly neo-classical view in saying “The removal of the subsidies and the price controls will, over time, bring prices down again. And the removal of the budget deficit caused by paying the subsidies will kill off the inflation too… The only sadness is that it requires the cover of an outsider like the IMF to be able to do what all know needs to be done anyway… the end result will be to make Egyptians themselves better off.”

More Rabaa remembrance: Shahira Amin collects testimony for Al Monitor from unnamed journalists who were present at the forced dispersal of the Rabaa sit-in in 2013, including an unnamed journalist who was with Sky News cameraman Mick Deane immediately after he was shot until the time he passed away from his wounds.

El Watan’s Mahmoud Khalil attacked Supply Minister Khalid Hanafy for allegedly staying in a luxury hotel at the ministry’s expense. He dismissed the denials by the ministry that Hanafy could afford his own room, stating that Hanafy ought to have given up some of his other ministerial privileges to save the government some money at a time when it is asking the people to tighten their belts. Elsewhere in the same newspaper’s pages, Moataz Bellah Abdel Fattah has appointed himself the financial guru of the average Egyptian, dolling out economic and investment advice on how to adapt to the tough economic times ahead.

The state’s policies are contradictory and encourage sectarianism, the Al Masry Al Youm columnist who writes under the pseudonym Newton says, criticising the amendments to a draft bill on the construction of churches. It is unbelievable that church building in Egypt is still restricted by a law from 1856, he says. Not one stone has been added to the wall of social solidarity since the days of Mohamed Ali Pacha, he concludes.

Farouk Goweda says the National Research Centre should play a role in pinpointing what can be done to reduce the recent spike in domestic violence in a piece for state-owned Al Ahram. Goweda says the role of family in society is weaker for a generation that is increasingly “lawless” and under pressure. A mixture of politics, sporting events the media promote violence, he says.

Planting forests in Egypt’s deserts: A report from DW in June profiles the Serapium forest, one of 36 desert locations where trees have been planted as part of a research program by the Egyptian government. Drip irrigated with treated effluent, the forests include commercially valuable species such as eucalyptus and mahogany. The forests also help prevent the spread of desertification. “What’s more,” DW’s Oliver Ristau notes, “there aren’t really any better alternative uses for Egyptian sewage effluent.” (Read Sewage effluent fights desertification in Egypt)

Shinzo Abe appears as Super Mario in Rio: Japanese Prime Minister Shinzo Abe stole the show in his appearance during the Rio Olympics closing ceremony. After having previously said he’d be unable to attend, a video aired at the ceremony showing Abe in a car in Tokyo saying he’ll never make it to Rio in time. In the video, he then proceeds to turn into Super Mario. The following video picks things up from there. Tokyo will host the next Summer Olympics in 2020. (Watch, running time: 42 seconds)

Japan will provide Egypt with USD 451 mn in funding for the development of the Grand Egyptian Museum, announced Japan’s Vice Minister for Foreign Affairs Motome Takisawa during a meeting with Prime Minister Sherif Ismail, Al Shorouk reported on Sunday. He also added that Japan will work with Egypt to send larger numbers of tourists our way and will also strongly consider supporting Moushira Khattab’s bid to become the next director-general of UNESCO. Takisawa had also met with President Abdel Fattah El Sisi to discuss bilateral relations.

Trade Minister Tarek Kabil has greenlit formal investigations into the alleged dumping of galvanized steel sheets in the domestic market by China, Belgium and the EU, according to the head of Egypt’s anti-dumping body Ibrahim El Seginy in an emailed statement. Domestic producers have submitted complaints foreign players are dumping excess production in Egypt at below-market prices. Kabil also announced yesterday the end of an investigation into claims that polyethylene terephthalate (PET) was being dumped in the local market by a number of countries, saying Egyptian manufacturers had withdrawn their complaints.

Apache Corporation is planning on expanding its investments in Egypt, CEO John Christmann told Daily News Egypt. Christmann met with Prime Minister Sherif Ismail and Oil Minister Tarek El Molla yesterday to discuss future projects and said Apache may be interested in new exploration contracts.

There has been a very low turnout of E&Ps players on the 11 blocks in the Western Desert and the Gulf of Suez tendered by the Oil Ministry back in May, energy officials tell Youm7. The blocks were reportedly abandoned by previous concession holders, the source added. Bidding on the blocks closes at the end of the month.

The Egyptian Electricity Holding Company (EEHC) is in talks to borrow EGP 5 bn to pay back-dues owed to the petroleum industry, Al Mal reports. EEHC is reportedly looking to borrow the funds for five years from a consortium that includes CIB, Banque Misr, Arab African International Bank (AAIB), and QNB a source said.

The Egyptian German Electrical Manufacturing Company (EGEMAC) was awarded a tender to build two transformer stations at a total cost of EGP 160 mn, chairman Medhat Ramadan told Al Mal. One 220 kV capacity transformer will be built in Tanta at a cost of EGP 103 mn, and another 66 kV transformer will be built in Sharkiya at a cost of EGP 57 mn, he added. The projects are expected to be completed within six-to-eight months. The company is also scheduled to begin construction on three transformer stations at a total cost of EGP 350 mn in September.

The Housing Ministry has contracted the Military Production Ministry to install 1.4 mn smart water meters, Al Shorouk reported. The project is meant to reduce inaccurate readings of traditional water meters, said Housing Minister Mostafa Madbouly. The project ultimately aims to install 3 mn meters.

The CIT Ministry has signed a final agreement with China’s Tecno to build its first factory in Egypt to manufacture smart home appliances, mobile phones, and LED lighting, according to a statement. 80% of the factory’s output production will go towards domestic consumption, while the remainder will be exported. Tecno aims to manufacture 17 mn mobile phones and tablets within four years, in addition to building a research center and software development facility. The maker of low-budget phones bills itself as working “exclusively in Africa” and already has assembly facilities in Ethiopia.

Home appliance manufacturer Universal has begun operations at a new EGP 130 mn factory, Chairman Yousry Kotb told Al Shorouk. The factory will make Universal self-sufficient in terms of components and will also supply other domestic factories, he added. Universal exports 60% of its production, representing 30% of Egypt’s total home appliance exports, Al Shorouk says.

The Pharma Industries Export Council is petitioning the Export Subsidies Fund to include pharma and medications in their subsidies program, Al Ahram reports.

The Transportation Ministry has completed 55% of the Kalabsha Corridor in Aswan, Minister Galal Saeed told Amwal Al Ghad. The corridor aims to connect the eastern bank of the Nile to the west through a series of eight bridges and six tunnels, he added. The corridor will allow for easier construction of new urban communities, as well as industrial, and agricultural projects in areas that were previously difficult to access, he said.

Arqaam Capital is advising on two IPOs in the Dubai Financial Market worth a combined AED 4 bn (USD 1.1 bn) for execution in 2H2016, said the firm’s managing director Sherif El Helw in an interview with Amwal Al Ghad. Both companies are UAE-based and operate in the retail and financial sectors, he tells the newspaper. El Helw had previously told the newspaper in July that Arqaam was running 15 transactions in Egypt and the GCC, including M&A transactions worth just north of a USD 1 bn. The firm plans to grow its assets under management to USD 3 bn in two years from a current USD 1 bn, primarily through the launch of new private equity funds.

Bank Audi may be interested in getting into investment banking in Egypt, Al Mal reports, saying it is looking to launch Audi Capital as a subsidiary of Bank Audi’s recently-acquired Arabeya Online Securities Brokerage. The bank is looking to expand its non-banking financial services arm and considering growing into asset management, advisory services, and private equity. Bank Audi already runs investment banking arms in Lebanon and Saudi Arabia.

The Egyptian Financial Supervisory Authority (EFSA) has demanded that four listed companies, including Beltone Financial, submit fair value estimation reports within one month, Al Borsa reports. EFSA recently announced that any company with shares that change significantly against market trends within a period of either three or six months will have to submit a fair value report. Egypt South Africa for Telecommunication, Arab Development & Real Estate Investment Co, and the International Company for Medical Industries are the other companies each required to submit such an assessment at the current time.

The House of Representatives committees on planning, budgeting, and agriculture have agreed to amend the Principal Bank for Development and Agricultural Credit law to list it under the jurisdiction of the CBE and not the Agriculture Ministry, Al Borsa reported. The move will allow for less government interference with the bank’s operations and give the CBE a chance to clean up its portfolio and limit its losses. The amended draft will be voted on by the House at its next plenary session.

Prime Minister Sherif Ismail talked of the need to act quickly and decisively on tax reform at a meeting with the Egyptian Union for Investors Associations (EUIA) to discuss the organization’s recommendations for the economic reform agenda, Al Mal reports. It is unclear if the meeting delved into specifics of the VAT. EUIA is pushing for a 12% rate that would help mitigate the inflationary effects on the poor. As for the cabinet’s development agenda, Ismail tells the EUIA that it will prioritize projects in Upper Egypt and that these projects will be in partnership with the private sector. The organization plugged its agenda at the meeting which included changes to the Sinai Development Law, cutting imports, and making land available for projects in Matrouh and Upper Egypt.

Gunmen killed an alleged police source and an army soldier at a police checkpoint in Menoufia, the ambulance services director told Reuters. Five other people were injured, including two civilians, he added. A terrorist organization calling itself “Liwa Al Thowra” (Revolutionary Brigade) has apparently claimed responsibility for an attack, El Watan reports.

70 Sudanese nationals have been detained in Egypt after trying to illegally cross into Israel via North Sinai, Sudan’s Foreign Ministry spokesperson told Ahram Online. There was no immediate confirmation of the arrests by the Egyptian government.