The Enterprise interest rate poll: 75% of economists call rate cut on Thursday.

The central bank’s Monetary Policy Committee is set to meet this Thursday, 22 August to review key interest rates. Three-quarters of economists we polled believe that the central bank will cut rates for the first time since February. We have more on this in this morning’s Speed Round, below.

President Abdel Fattah El Sisi will be in France next week to attend the G7 Summit, which will run from Sunday to Tuesday in Biarritz.

The National Cancer Institute reopened yesterday following the deadly car bombing earlier this month, Cairo University president Mohamed Al Khosht told Al Masry Al Youm. The institute was closed after a car bomb on 4 August killed 20 people and injured 47 others. Cairo University and Arab Contractors Company are still in the process of repairing the building, Khosht said, but confirmed that patients yesterday began to be readmitted for treatment.

You know what’s really bad for markets? All these headlines about how bad things are going for markets. An economic slowdown could be essentially summoned by “alarmist headlines” that stir sentiment in the wrong direction, and would require “political will to head off,” El Erian said in a Bloomberg Radio interview. “We may end up in a situation where people read these alarmist headlines, they get concerned, they stop spending. As they stop spending, companies stop investing. And then we get a major slowdown.”

Pimco: Unreported Chinese loans are the “biggest risk for EMs right now”: Unreported loans given to emerging-market governments by Chinese state-owned banks are the “biggest risk for EMs right now,” Erin Browne, a portfolio manager at Pimco, told MarketWatch. The size and terms of many overseas loans issued by Chinese banks are not disclosed, a problem for EM bondholders who have no way of ascertaining a bank’s creditworthiness or the restructuring process that will be followed in the event of default. “Lending by sovereigns that are not part of the official institutional sector is the biggest risk for emerging markets right now – it clouds the waters with respect to how official sector involvement will be during times of distress,” Browne said. “That debt is not transparent to the IMF and to other borrowers that have issued to these countries. If they were to default, or if they were to go in a period of distress, it would be contingent on China setting the rules in terms of working out that debt,” she added.

Fitch downgraded Argentina’s sovereign debt rating to CCC on currency concerns following primary elections, pushing it deeper into junk territory, according to the Financial Times (paywall). Deteriorating market sentiment following the victory of Alberto Fernandez over Mauricio Macri in the country’s primary elections, and the ensuing sharp depreciation in the ARS and widening of sovereign debt spreads “poses a major setback to macroeconomic stabilisation efforts and sovereign financing conditions.” This could hurt sovereign liquidity and increase debt sustainability risks, Fitch said.

Whistleblower accuses GE of fraud worse than Enron: Harry Markopolos, the whistleblower who exposed the Bernie Madoff Ponzi scheme, is accusing General Electric of USD bns-worth of fraud following a yearlong investigation into the company on behalf of a hedge fund, according to the Guardian. “GE’s USD 38 bn in accounting fraud amounts to over 40% of GE’s market capitalization, making it far more serious than either the Enron or WorldCom accounting frauds,” Markopolos said in his report, “General Electric, a Bigger Fraud than Enron.” The accusations caused GE’s shares to plummet 15%.

Sudan’s civilian, military leaders sign final transitional government agreement: Sudan’s Forces of Freedom and Chance (FFC) opposition coalition and the Transitional Military Council (TMC) have signed the final power-sharing agreement that will see a “sovereign council” set up to rule the country for a transitional three-year period until elections are held, Reuters reports. The council will include five members nominated by the TMC, five by the FFC, and one agreed on by both parties. The council’s members will be announced later today, but the TMC has already reportedly nominated its head Abdel Fattah Al Burhan to lead the council and his deputy Mohamed Hamdan “Hemeti” Daglo to be second in charge, Sky News Arabia reported.

Prime Minister Moustafa Madbouly attended the signing, alongside African Union Commission Chairperson Moussa Faki Mahamat, Ethiopian Prime Minister Abiy Ahmed, and representatives from Saudi and the UAE. The parties signed a constitutional declaration earlier this month after weeks of negotiations that followed the ouster of former Sudanese strongman Omar Al Bashir in April.

In other international news:

• Houthi drones attack Saudi oil plant: Another Saudi Arabian oil and gas facility came under attack by Houthi rebels yesterday, after a drone fired on a natural gas liquids plant at Shaybah. The attack failed to stop production. (Bloomberg)
• US gives Huawei another reprieve: Huawei will have another 90 days to find alternative suppliers after the US Commerce Department issued a temporary license allowing US companies to do business with the Chinese tech firm. (CNBC)

A pretty bland night on Egypt’s airwaves. The story of the night was the inauguration of phase two of a project to build 100k greenhouses on the Cairo-Alamein road. Construction and housing, and Mohab Mamish’s departure as Suez Canal boss also got some airtime.

El Sisi inaugurates phase two of “100k greenhouse project”: President Abdel Fattah El Sisi inaugurated 1.3k greenhouses built over a 10k feddan area as part of the second phase of a project in the Mohamed Naguib military base on the Cairo-Alamein road, Al Hayah Al Youm’s Lobna Assal reported (watch, runtime: 6:10). The “100k greenhouse project,” Assal says, is the largest of its kind in the Middle East, and is enough to provide food for 20 mn people. The project’s second phase is expected to yield 184k tonnes of state-produced vegetables a year, according to a report by Mubasher.

The president wants to personally ensure King Mariout landowners go legal: El Hekaya’s Amr Adib took note of El Sisi’s request during the inauguration to personally review and resolve case files regarding building code violations by landowners in an area known for second homes owned by the rich on the outskirts of Alexandria (watch, runtime: 5:27).

Housing prices also get some airtime: The Housing Ministry now has a comprehensive list of house prices in new urban areas, ranging from social housing to medium-level and distinctive medium housing, to lofty towers in New Alamein and the administrative capital, Assistant Housing Minister Walid Abbas told Hona Al Asema’s Reham Ibrahim in an interview (watch, runtime: 1:43).

TV host waves goodbye to Mohab Mamish: Assal took note of El Sisi tapping Lieutenant General Osama Rabie as the Suez Canal Authority’s new chairman (watch, runtime: 1:20). We have the story in this morning’s Speed Round, below.

SURVEY- CBE could cut key interest rates this Thursday: The Central Bank of Egypt (CBE) could finally cut benchmark interest rates by between 50-100 bps when the Monetary Policy Committee (MPC) meets this Thursday, according to six out of eight economists polled by Enterprise. Easing inflation, coupled with the US Federal Reserve and several emerging market central banks cutting interest rates, relieves much of the pressure on the CBE and leaves room for a cut, according to the economists. Pharos’ Radwa El Swaify forecasts a 100 bps cut due to falling inflation, but said that there is a chance that the CBE could wait until September’s meeting to ride out the residual effects of July’s subsidy cuts. AbouBakr Emam, head of equity research at Sigma Capital, anticipates a more cautious rate cut due to the inflationary effects of the back to school season and energy price hikes, as well as the current instability in the global markets. The MPC last cut interest rates in February, when the overnight deposit and lending rates were reduced by 100 bps to 15.75% and 16.75%, respectively.

Inflation figures a major boon for the doves: Egypt’s annual headline inflation rate dropped against expectations to 8.7% in July from 9.4% in June, its lowest recording in four years, while core inflation fell to 5.9% in July from 6.4% in June. The low readings came despite the government raising fuel prices between 16% and 30% in July and new electricity subsidy cuts coming into effect. “This shows that prices are under control which gives space for the CBE to resume monetary easing and boost economic growth,” HC’s Sara Saada said.

Global conditions might not stand in the way of a cut: Shuaa Securities’ Esraa Ahmed said that there would be little risk of capital flight if the CBE lowered rates during the current volatility in the global financial markets. “There is no pressure from the fear of losing portfolio investors in debt because investors will go the highest yield available rather than stock markets with all that’s happening internationally, the ongoing trade wars and recession fears. This could push investors toward debt in moderate risk EMs,” she said. And the US Federal Reserve’s recent rate cut also reduces the risks of outflows from Egyptian domestic data, Saada said.

Not everyone agrees though: “Foreign investments in Egypt’s debt securities are important so the CBE may be obligated to keep rates high,” Mubasher International’s Head of Research Hisham El-Shebiny said. And Mona Bedeir, senior economist at Prime Research, said that although recent inflation data could enable the CBE to cut rates, recent EM volatility caused by the devaluation of the Yuan and events in Argentina may cause it to hang tight. “The lingering global risk and renewed fears of the deterioration in risk sentiment in emerging markets might precipitate the CBE to remain patient in the upcoming meeting,” she told us.

And there are a number of other reasons why the CBE may hold off on making a cut: El-Shebiny said that weak FDI inflows, the risk of a financing gap, and geopolitical risks are all factors that could tempt the MPC away from making a cut this month.

Beyond August: Last month’s unexpectedly low inflation figures have raised expectations that the CBE will accelerate easing during the final months of the year, with Pharos now predicting that 200-300 bps worth of cuts will be made before the end of the year. This will please businesses, who have called for interest rates to return to pre-floatation levels to encourage investment.

FinMin eyes more ambitious debt-to-GDP ratio targets within three years: The Finance Ministry is planning to reduce Egypt’s debt-to-GDP ratio to pre-2011 levels of 77.5% by the end of FY2021-2022, according to a ministry statement. This is lower than the previous target announced in March, which aimed to reduce debt to 80% of GDP by 2022. Debt levels sat at 90.5% of GDP at the end of FY2018/2019, having shrunk from 108% at the end of FY2016-2017. The ministry is targeting a ratio of 82.5% at the end of the current fiscal year.

Average debt maturity climbs to 3.3 yrs for the first time: The ministry has raised the average maturity of the government’s outstanding debt to 3.3 years for the first time, government sources told Enterprise. The average was previously 1.5 years before gradually inching up to the current level. “We will continue to focus on [issuing] longer-maturity debt, which is in high demand from foreign investors,” the sources said. A senior official told us in January that the government will issue 10- and 30-year bonds this fiscal year to cover interest on 3- and 9-month treasury bills, and reduce pressure on the budget. The reliance on short-term T-bills has meant that the government has had to return to the debt markets to both refinance maturing debt and embark on new debt financing.

Alongside issuing bonds with longer maturities, the ministry will also start repaying outstanding short-term debt using the state’s monthly primary budget surplus, rather than borrowing to refinance. The government achieved a primary surplus of EGP 104 bn last fiscal year, and is aiming to increase the figure to EGP 149 bn this fiscal year, according to Finance Ministry figures.

EXCLUSIVE- Gov’t to choose between e-Finance and BdC for first state company IPO in privatization program: The government is planning to offer shares in either state-owned Banque du Caire (BdC) or financial technology company e-Finance through an initial public offering before the end of the year under the second wave of the state privatization program, sources told us. The choice would depend on the opinion of relevant advisors and the views of cabinet, the sources said. Public Enterprises Minister Hisham Tawfik told us last month that the state’s privatization program had been put on hold until at least September, in order for the stock market to recover from weaker demand during the summer holidays and Eid break.

Call it a gut feeling, but we think BdC looks more likely to go first: When the state is planning to pull the trigger and make a move on either company is still unclear. Both prospects would naturally depend on stock market conditions, and also on the decisions of the IPO advisors and the government committee in charge of the program. Chairman and CEO Tarek Fayed told us in an exclusive interview earlier this year that BdC is “internally ready” for the IPO and is awaiting a decision by stakeholders and regulators.

Contrast that with e-Finance, which is still subject to a two-month valuation study to determine the share price, chairman and managing director İbrahim Sarhan told us. He also pointed out over the weekend that the key factor in his IPO moving forward is to gauge whether the market is ready for another e-payments company to go public after the IPO of privately-owned Fawry, which took place earlier this month.

We know this much about the e-Finance IPO: Pharos’ investment banking arm and Renaissance Capital were tapped to act as joint global coordinators for the sale, Pharos’ Managing Director and Head of Investment Banking Noha Ghazaly told us late last month. Zaki Hashem & Partners, meanwhile, will act as legal advisors, and Baker Tilly will be preparing the fair value report.

The sale could involve a 10-15% stake in the company, but the exact value is still subject to the valuation study, Sarhan confirmed. The IPO will see the company’s main shareholder, the National Investment Bank, sell down its stake and will also involve a capital increase since no shareholders are presently looking to exit or sell down their stakes, Sarhan also said, confirming Ghazaly’s earlier statements to Enterprise.

What will e-Finance do with the proceeds? Some of the IPO’s proceeds will be deployed to expand in Africa to make use of Egypt's membership in the Common Market for Eastern and Southern Africa (Comesa), while some will be used to widen the company’s footprint in the local market, Sarhan said. The IPO will also accelerate the pace of capital increases to more than once every two years, and increase the company’s focus on internal governance.

As for BdC: Two months after our sit-down with Fayed, CBE governor Tarek Amer said that BdC could offer a 30-40% stake, up from the previously anticipated 20-30% stake. The original stake was expected to see the bank raise between USD 300-400 mn.

STARTUP WATCH- Incorta raises USD 30 mn in series C round: California-based data analytics startup Incorta, which bases its software development operation in Egypt, has raised USD 30 mn in a series C funding round, Al Mal reports. US-based private equity firm Sorenson Capital led the round, which saw participation from Google Ventures and Microsoft’s Venture Fund (M12), as well as the Tesla venture fund counterpart. Incorta was founded in 2013 by former Oracle executives, including Egypt-born Osama Elkady. The company also has among its ranks Careem Egypt’s former managing director Wael El Fakharany as a regional VP.

Non-oil exports grew 2.3% in 1H2019 to USD 13.04 bn, up from USD 12.75 bn during the same period last year, according to the General Organization for Export and Import Control (GOEIC). The top exported products included gold, nitrogen fertilizers, television screens, and clothing. No details were provided on the largest export markets during the six-month period.

LEGISLATION WATCH- New law to govern industrial zones ready in three months: The Trade Ministry Industrial Development Authority (IDA) is expecting to complete in three months’ time a draft law to govern how designated industrial zones are administered, IDA boss Magdy Ghazy told Youm7. Ghazy provided no further details beyond stating that that the IDA is focusing on a strategy to establish specialized industrial zones in a bid to reduce Egypt’s dependence on imports.

MOVES- President Abdel Fattah El Sisi has tapped Lieutenant General Osama Rabie as the new head of the Suez Canal Authority (SCA), succeeding Mohab Mamish, who was appointed as a presidential advisor on seaports and the Suez Canal, according to reports. Rabie served as the deputy chairman of the SCA under Mamish. Mamish has been head of SCA since 2012. Reuters also has the story.

El Sisi also appointed Yehia Zaki as the president of the Suez Canal Economic Zone, also taking on a post that was held by Mamish, according to an official statement. An engineer by trade, Zaki is the managing director of renowned Beirut-based engineering consultancy Dar Al Handasah. He also sits on the boards of Egypt’s sovereign wealth fund, Egypt Post, the British Egyptian Business Association, and the Egyptian-British Chamber of Commerce.

Topping coverage of Egypt in the foreign press this morning: A 13-year-old boyhas released a video publicly asking for President Donald Trump to help secure the release of his mother, a dual US-Egyptian national detained last month upon arrival in Egypt for a visit, CNN reports.

Other headlines worth a moment of your time:

• Activists slam human rights conference in Egypt: The UN decision to hold this year’s regional conference on defining and criminalizing torture in Egypt with the government’s National Council for Human Rights has drawn criticism from local human rights activists, Reuters reports.
• Egypt is suffering from a shortage of healthcare professionals: The country’s health sector "at risk of failing” as Egyptians are attracted to the more favorable working conditions abroad, says the Arab Weekly.
• Salafi preacher to give sermons, raises a few eyebrows: Moderate Muslims in Egypt have “reacted with alarm” after authorities allowed a Salafist fundamentalist to give sermons at a mosque in Alexandria, says the Arab Weekly.
• There is “excessive sensitivity in Egypt to any word of criticism against the homeland,” an Egyptian journalist wrote recently in Al Masry Al Youm. Extracts from her column have been picked up by the Middle East Media Research Institute.

New research exposes the ideologies of economists: Suggesting that economics is anything other than a rigorously objective and deeply scientific discipline can generate quite the controversy among economists. Even after the failure to predict the 2008 financial crisis — for which neoclassical economics was criticized for being too hierarchical, prescribed, and dismissive of alternate perspectives — the mainstream has continued to claim a fervent commitment to neutrality. But research published earlier this year by Mohsen Javdani, associate economics professor at the University of British Columbia, and Ha-Joon Chang, professor at Cambridge University, calls these claims into question, and provides strong evidence for a pervasive ideological groupthink within the discipline.

Smith or Marx? Javdani and Chang surveyed 2,400 economists across 19 countries (92% of which held PhDs) in which respondents were asked to either agree or disagree with 15 statements made by famous economists. The trick? The researchers randomly changed the author of the quote without their knowledge to test whether the mere attribution of a name would alter their opinion on the statement. Quotes made by Adam Smith and Friedrich Hayek, for example, were misattributed to Karl Marx and Sigmund Freud in a bid to detect underlying prejudices. Other participants meanwhile were not given a source attribution, and had to evaluate the statement without knowing its author.

“Strong ideological bias”: The results suggest that ideology does indeed have a tendency to displace scientific objectivity among economists. Respondents were less likely to agree with a statement attributed to a non-mainstream source, and more likely to agree with quotes attributed to Kenneth Arrow and David Levine — regardless of its content. A large majority (82%) of respondents said that a statement should only be evaluated by content rather than author, suggesting that many have a genuine inability to acknowledge underlying biases. Interesting too, is that — despite the overwhelming dominance of neoclassical doctrine in the mainstream — randomized source attributions produced a definite lack of consensus over theory and policy.

A visual reminder of the (rather vast) human history, and Egypt’s early starring role: This video shared by Visual Capitalist (watch, runtime: 19:07) gives a neat overview of human history and civilization from the first appearance of modern humans in around 200,000 BCE. Although the first signs of early civilization in 67,000 BCE were in southern Africa, Egypt was declared the first advanced civilization in around 3150 BCE and holds claim to many of the most impressive achievements of the ancient world, including the establishment of a numeral system (3350 BCE), the development of the 365-day calendar (2860 BCE) and the building of the Great Pyramids and the Sphinx (roughly 2570-2460 BCE).

Other highlights for history geeks: The rise and fall of empires including Greece, Rome, China, Turkey, India, the Umayyad and Abbasid Caliphates and the Mongols. A blink-and-you’ll-miss-it moment shows the impact of the Black Death on the global population, which fell significantly from 424 mn in 1348 to 376 mn in 1359 thanks to the deadly disease. Meanwhile, moving into the modern era, you can see how the population has skyrocketed in the last century: from 1.1 bn in 1830 to 7 bn in 2016.

Egypt tightens controls of Russian agricultural imports following nuclear incident: Egypt will tighten controls of imports of agricultural goods from Russia following last week’s nuclear incident, head of the National Food Safety Authority (NFSA) Hussein Mansour told Al Masry Al Youm. The measure is being taken due to concerns over the possible radioactive contamination of food products, Mansour said, adding that the import restrictions could be expanded to include countries bordering Russia. A village was ordered to evacuate last week after an explosion at a nuclear facility in the northern Arkhangelsk Oblast left at least five people dead. State nuclear company Rosatom has been tight-lipped about the incident, but experts have suggested that the explosion occurred during tests on an experimental nuclear missile.

The New and Renewable Energy Authority (NREA) will begin selling electricity from its plants to the Egyptian Electricity Transmission Company (EETC) at EGP 0.55 per kWh, up 14.5% from EGP 0.48 per kWh, sources from the ministry told the press. The increase, which is the second after the price was hiked from EGP 0.34 per kWh last August, came following approval from the Egyptian Electric Utility & Consumer Protection Regulatory Agency (Egyptera).

The government is planning to expand Egypt’s natural gas supply network into the households by 950 km by the end of 2023, Oil Minister Tarek El Molla said, according to Mubasher. This would bring the length of the network to 8750 km. El Molla did not mention the expected cost of the expansion, nor the expected increase in the percentage of households with access to natgas.

Eastern Tobacco raised the prices of its Mundial and Black Label cigarettes by EGP 1, the company said in a bourse filing (pdf). Mundial cigarettes now cost EGP 17.5 per pack and Black Label costs EGP 23 per pack. The increase is due to VAT, the company said.

The Financial Regulatory Authority (FRA) awarded Banque Misr an investment banking license, FRA Chairman Mohamed Omran told Middle East News Agency (MENA). The license was awarded without Banque Misr needing to establish a new company.

The Supreme Administrative Court has postponed to 24 August appeals filed by the State Lawsuits Authority and a number of companies to bring back the now-canceled 15% import duty on iron billets after two judges resigned from the panel, according to Al Mal. The lower administrative court last month turned down the Trade Ministry’s appeal to reinstate the 15% duty, which it lodged after 21 iron factories won a case at the court reversing the ministry’s decision.

The Finance Ministry amended the executive regulations of the Customs Act to unify the procedures of customs valuation for transit goods, the Finance Ministry said in a statement. The amendments allow imports that haven’t been custom-cleared to be transported to warehouses outside of ports and special economic zones after valid guarantees are presented.

The government is planning to launch a government portal for its industrial investment map by next month, according to an Ittihadiya statement. President Abdel Fattah El Sisi urged ministers to prioritize focus SMEs during a meeting with Prime Minister Moustafa Madbouly, Trade and Industry Minister Amr Nassar, and SME Development Authority head Nevine Gamea on Thursday.

President Abdel Fattah El Sisi has approved a EUR 350 mn loan agreement with the European Investment Bank (EIB) to be used for the renovation and development of Cairo Metro Line 1, according to a statement on the Official Gazette picked up by Zawya.

Egypt’s national handball team will face Germany in the 2019 Men’s Youth Handball World Championship final tonight at 6 pm CLT, according to the International Handball Federation’s website. The U19 team made it to the final for the first time in the team’s history, despite the team’s U20 counterpart having won the title on home soil in 1993.

Cairo giants Zamalek has tapped Serbian manager and former Orlando Pirates coach Milutin Sredojević as the team’s new head coach, according to KingFut.

Egypt is launching a national sports initiative, “A Bike for Every Citizen,” which aims to change the country’s transportation culture, promote fitness, and reduce fuel consumption and emissions, according to a cabinet statement. The government will work with bicycle companies to provide bikes, with payments being made in installments through banks. The initiative will be rolled out next month, starting with Cairo and Giza.