IMF hints at post-loan arrangement with Egypt during busy weekend in Washington.

It’s the final day of the IMF and World Bank annual meetings. Egyptian officials in Washington, DC, for the gathering had another busy few days over the weekend meeting with officials and members of the business community — and the world’s central bankers have promised to use “all appropriate policy tools” to stem the slowdown in global growth. We have the full rundown in this morning’s Speed Round, below.

House committee begins discussions to pave way for Euroclear: The House of Representatives’ econ committee will today begin discussions on government-proposed amendments to the Central Depository and Registration Act, the local press reports. The amendments will see the establishment of a new holding company to handle debt issuances in light of the Euroclear agreement signed over the weekend. We have more on this in our Speed Round, below.

FinMin outlines in-the-works Customs Act amendments: The Finance Ministry was out yesterday with a breakdown of the broad strokes of proposed amendments to the Customs Act. A final draft of the changes — which are expected to expedite customs clearance, create a “whitelist” of trusted importers, and broaden the discretion of the Customs Authority — was released last year, but the bill still remains under discussion in the House of Representatives.

The region’s largest metro station will open in Cairo today as Transport Minister Kamel El Wazir inaugurates the Heliopolis metro station on line three, Ahram Online reports.

Kuwaiti PM Jaber Al Mubarak starts his three-day visit to Cairo today for talks with President Abdel Fattah El Sisi and PM Moustafa Madbouly.

Key dates to pencil into your agendas this week and next as we wrap up the month:

• Our friends at AmCham will be hosting Social Solidarity Minister Ghada Wali for their monthly luncheon today. Members can register here.
• The Intelligent Cities Exhibition & Conference will take place at the Hilton Heliopolis on Wednesday and Thursday.
• A B2B conference for German and Egyptian companies will take place on Monday, 28 October in Cairo. Click or tap here to register.
• The US Federal Reserve will meet on 29-30 October to review key interest rates.

The two-day Russia-Africa summit gets underway in Sochi on Wednesday, 23 October: Leaders from more than 50 African countries will gather at the Black Sea resort town this week to discuss strengthening economic ties across a range of sectors with Moscow. The event, which will be chaired by President Abdel Fattah El Sisi and Russian President Vladimir Putin, will feature panel discussions on subjects ranging from Russian-African cooperation in energy, trade and infrastructure investment to collaboration in science, technology and digital security.

Among the Egyptians due to appear on stage are Investment Minister Sahar Nasr, CIT Minister Amr Talaat, Amani Abou-Zeid (wearing her African Union hat), Suez Canal Economic Zone boss Yehia Zaki, and Qalaa Holdings chief Ahmed Heikal.

What we’re keeping our eye on:

• An update on the RIZ? Suez Canal Economic Zone Chairman Yehia Zaki and Trade Minister Amr Nassar will join a panel discussion on the Russian Industrial Zone (RIZ) with officials from the African Export-Import Bank, the Russian Export Center and Russian Industries Overseas Egypt. We assume that a meeting between Nassar and his Russian counterpart is in the cards — but will there be any new announcements?
• Crunch talks between El Sisi and Ahmed: El Sisi announced last week that he would meet with Ethiopian Prime Minister Abiy Ahmed in Russia for talks on the Grand Ethiopian Renaissance Dam. Could we see a breakthrough in negotiations when the two leaders meet later this week?

Equities could see a healthy rally to close out the year, bumping up EMs and Europe: The prospect of a US-China trade agreement, greater spending by Germany and China, a further 50 bps interest rate cut by the US Fed, and a smooth Brexit transition could all drive equities higher in the coming six months, the Financial Times says. Look for the USD to weaken against EM currencies and for EM and European shares to possibly out-perform Wall Street, the salmon-colored paper remarks.

SIGN OF THE TIMES- China reports 30-year record low growth figures, worsening concerns over global slowdown: China’s economy is growing at the slowest rate in about 30 years as the recent trade war, a fall in global growth, and the Hong Kong protests are catching up with economic performance, according to the Financial Times. Unlikely to get back to the double-digit rates that characterized its growth up until this decade, China needs to start planning for the side effects of a slowdown — particularly unemployment.

Embarrassment for Johnson as Brexit saga takes another turn: UK PM Boris Johnson has been forced to do something he had sworn never to do — request an extension to the 31 October Brexit deadline. The House of Commons was supposed to vote on his Brexit agreement with the EU yesterday, but a last-minute bill to delay the meaningful vote was narrowly passed, ensuring that the drama will continue for at least a few more weeks. (BBC)

Across the pond, Canadians will head to the polls tomorrow in a federal election. It’s neck-and-neck between Justin Trudeau’s governing Liberal Party and Andrew Sheer’s Conservatives. Check out CTV, CBC or the Global and Mail for more.

It was a mixed bag of nuts on the airwaves last night, with no one story dominating the airwaves.

Egypt will participate in the two-day Russia-Africa summit in Sochi in late November, Hona Al Asema’s Reham Ibrahim reported(watch, runtime: 08:13). President Abdel Fattah El Sisi will co-chair the summit alongside Russian President Vladmir Putin, so we wouldn’t be surprised to see some reporting by the talking heads from Sochi.

It was the Constitutional Court’s fiftieth birthday yesterday, Al Hayah Al Youm’s Lobna Assal noted (watch, runtime: 06:31). President El Sisi invited judges to celebrate the event, Hona Al Asema’s Ibrahim added in her report (watch, runtime: 05:09).

El Sisi met with Military Production Minister Mohamed El Assar to discuss national projects and domestic manufacturing, among other issues, Ibrahim said in a separate segment (watch, runtime: 01:49).

Egypt has connected Nile water to North Sinai through the Sheikh Jaber Canal, El Hekaya’s Amr Adib reported, explaining to his audience that the move shows we still have control over our waters and that Sinai is not being neglected (watch, runtime: 11:12). The development will help boost agriculture in the peninsula, he said.

What the talking heads want you to know about foreign affairs:

• Lebanon is still protesting against austerity measures Masaa DMC’s Eman El Hosary reported (watch, runtime: 06:00) and (watch, runtime: 15:35). Meanwhile, Adib urged Egyptians not to mock the situation in Lebanon because “it’s very serious” (watch, runtime: 05:38).
• Turkey continued its offensive against Syria on Saturday, killing women and children, Al Assal said (watch, runtime: 02:13), pointing to support from Doha (watch, runtime: 03:17).

Lamees is (almost) back: The queen of night-time talk shows is scheduled to return to the airwaves tonight. We’ll be adding her to our roundup tomorrow morning.

IMF hints at post-loan arrangements with Egypt: Future cooperation between Egypt and the IMF will center around continuing structural reforms and the Sisi administration’s program to shore up the social safety net, the IMF’s Middle East and Central Asia Director Jihad Azour said at a presser in Washington yesterday. He suggested that the IMF will work with Egypt on private sector growth, job creation and increasing transparency of state organizations.

Azour’s comments were part of a packed weekend in Washington for the IMF and World Bank as well as for the Egyptian delegation attending the annual meetings of the two bodies.

Malpass speaks on Egypt’s energy reforms: World Bank head David Malpass praised Egypt’s commitment to renewable energy production and energy sector reforms, which he said had opened the door to more private-sector investment.

Investment Minister Sahar Nasr called on the World Bank and IMF to ramp up investment in human capital in Africa. She said that Egypt is pushing for human capital to be the cornerstone of development policies on the continent during its chairmanship of the African Union, according to a ministry statement.

Infrastructure and trade: Egyptian officials also met with World Bank Vice President for Infrastructure Makhtar Diop to discuss infrastructure development, especially in the fintech sector, according to an Investment Ministry statement. In a separate meeting with International Islamic Trade Finance Corporation (ITFC) CEO Hani Sonbol, Nasr reached an agreement to boost trade with Arab and African neighbors.

New funding for wastewater treatment plant: Nasr also reached an agreement with the Arab Fund for Economic and Social Development to provide USD 248 mn to finance the second phase of a wastewater treatment facility in Bahr El Baqar. Orascom and Arab Contractors had signed in May a USD 739 mn agreement with the Armed Forces Engineering Authority to set up the plant.

More investment and funding for Egypt’s oil industry: Oil Minister Tarek El Molla suggested that the US Export-Import Bank provide funding to private sector players looking to invest in Egypt’s oil and gas industry, during a sit-down with the bank’s chairman, Kimberly Reed, according to a cabinet statement. John Christman, CEO of oil major Apache, told Madbouly, Nasr, and El Molla that the company is planning to expand its operations in Egypt, according to a cabinet statement.

Prime Minister Moustafa Madbouly met US officials and business leaders including US senators Bob Menendez and James Risch, US Republican Congressman Michael McCaul, representatives from Boeing, and Adtran CEO Tom Stanton.

Elsewhere during the annual meetings:

• Madbouly discussed recent developments on Grand Ethiopian Renaissance Dam (GERD) negotiations during a roundtable discussion organized by the Middle East Institute think tank, according to a statement.
• Nasr discussed the role of the private sector in Egypt’s economy
• El Molla gave a brief overview on the East Mediterranean Gas Forum
• CIT Minister Amr Talaat discussed Egypt’s digitization drive.

Stopping the global slowdown: Global central bankers and finance ministers pledged in a statement to use “all appropriate policy tools” to stem the slowdown in global growth at the annual IMF and World Bank meetings in Washington yesterday.

Didn’t the IMF just last week warn about the harmful effects of monetary stimulus? Yes, but the emphasis yesterday was on governments stepping up to the plate with fiscal stimulus — something that states in key economies (such as Germany) have so far been reluctant to do. “Available fiscal space should be used to support demand as needed,” the statement said. IMF boss Kristalina Georgieva also called on governments to step in with fiscal measures, instead of relying on monetary policy to support growth, Bloomberg reported.

More monetary stimulus is still very much on the table though: Although Eurozone policymakers have for the moment ruled out cutting interest rates even further into negative territory, finance chiefs yesterday made it clear that more rate cuts and bond-buying could be coming if needs be. “All tools can be applied — monetary policy where there is space for it,” Georgieva said. An IMF report last week warned that the trend towards monetary easing by central banks across the world is fuelling excessive risk taking by investors, particularly in the corporate and non-bank financial sectors.

Speaking of the IMF: Egypt is the second-largest IMF borrower with an outstanding USD 11.8 bn, or 11.4%, of IMF loans, Reuters says. Our figure — which stacked up throughout the three-year IMF-sanctioned economic reform program which started in November 2016 — is nothing to Argentina, which owes 42.7% of the lender’s total USD 102.8 bn in unsettled debt. Ukraine follows Argentina and Egypt at 9.1%.

Also this weekend: European leaders approved the fund’s outgoing boss Christine Lagarde’s appointment as the next president of the European Central Bank (ECB), according to the Associated Press. Lagarde will start operations on the first of November and serve an eight-year term.

Expect Egypt’s hot money inflows to keep up as long as short-term investors see political stability — and a positive post-loan relationship with the IMF. That’s the key takeaway in this piece by the Financial Times’ Heba Saleh on the attractiveness of Egypt’s debt. Short-term carry trade investors, Saleh says, are not particularly concerned with indicators that other investors might watch, including high debt levels, lagging FDI, and a substantial deficit.

Outflows following last month’s protests — which Citi says hit USD 800 mn — could return to Egypt if the political climate remains stable, analysts say. “Egypt remains popular because it is a high-yield jurisdiction that is relatively stable and especially attractive in comparison to other emerging markets because of its macro-stability,” Goldman Sachs MENA economist Farouk Soussa tells Saleh. Soussa also noted that he does not foresee “major fluctuation” in the FX rate, considering Egypt’s rising reserves.

The short-term carry trade could wind down soon, but expect a transition to long-term debt: As the Central Bank of Egypt resumes its monetary easing cycle, analysts expect investors to look at longer-term instruments. “Investors are not leaving Egypt. They are buying long-term bonds to take advantage of the potential for further rate cuts,” Soussa says. The Goldman Sachs analyst warns that this is not a sustainable situation, and that yields will eventually fall enough to make even long-term debt holdings unattractive. However, Citibank Africa economist David Cowan does not expect this scenario to materialize anytime soon, particularly “in a world of zero interest rates.”

Egyptian debt is one step closer to being Euroclearable: Egypt signed a “terms and conditions” agreement with Euroclear on the sidelines of the IMF and World Bank annual meetings in Washington, cabinet said in a statement yesterday. The agreement paves the way for local debt issuances to be cleared with the Belgium-based clearinghouse after Egypt has set up a central securities depository. The move is designed to make Egyptian debt more accessible to foreign investors, who can currently only access the debt market through a few local banks licensed to operate as primary dealers. Vice Finance Minister Ahmed Kouchouk said the agreement would increase the liquidity and demand for government debt, and lower servicing costs. Reuters also has the story.

The House will get to work today: The House of Representatives’ Economics Committee will begin discussing the necessary amendments to the Central Depository and Registration Act today, the local press reports. The new mechanism will likely be up and running by early 2020, a Finance Ministry official said, adding that it will start immediately after the amendments are passed and the depository is established.

Background: Egypt, which had first signed an MoU with Euroclear in April, plans to issue USD 3-7 bn in international bonds during FY2019-2020. The cabinet approved setting up the new central clearing and depository company in June.

Egypt’s banking sector has a lot of upside potential — and the way forward is to continue enacting structural reforms,Central Bank of Egypt (CBE) Governor Tarek Amer said during a keynote speech at the Institute of International Finance (IIF) annual meeting in Washington (watch, runtime: 23:35). Amer noted that the CBE has been implementing its own structural changes and is pushing to improve regulation of the sector with the Banking and Central Bank Act, which received cabinet approval earlier this month. Improved regulation will leverage Egypt’s position to bring more financial services to the economy, Amer said, noting that Egypt’s banking penetration rate is currently only at 32%.

Egypt’s economic fundamentals have “turned around quickly and dramatically,” helping to change the position of an economy “that has a lot to offer,” he said. Although the full results of reforms are yet to show, economic indicators are on the rebound and the correct foundation for growth is now in place, Amer said.

Domestic investors are to thank for successful FX reforms: Egypt now has the confidence of international investors, “but we have been relying more on regaining the confidence of the domestic market,” Amer said. The bulk of FX inflows to the Egyptian banking system have come from local players, helping the country’s foreign exchange reserves to recover to record highs.

Nothing new on IMF post-program agreement talks: The nearly-complete IMF program has “achieved is objective, and more,” and Egypt “is eager to continue using the expertise of the fund in one way or another,” Amer said in response to a question about the expected post-program agreement with the lender.

M&A WATCH- Ezdehar acquires 30% of Family Group: Private equity fund Ezdehar Management has acquired 30% of transport company Family Group for an undisclosed sum, the local press reported. The transaction reportedly saw Ezdehar subscribe to a capital increase, but also included a share sale. A midcap-focused fund, Ezdehar portfolio companies include leasing player Global Lease and loyalty card company Dsquares. The firm counts the European Investment Bank, EBRD, the UK’s CDC Group and Dutch development finance institution FMO among its limited partners.

Advisors: Al Tamimi & Co acted as legal adviser for Family Group while Shahid Law Firm advised Ezdehar, according to the report.

Correction: 20 October, 2019

An earlier version of this article incorrectly referred to Family Group as Family Corporation.

M&A WATCH- Dice’s takeover of Cairo Cotton almost complete: Dice Sport and Casual Wear will acquire Cairo Cotton before the end of the year, co-founder of Tahoun & Associates law firm Nermine Tahoun said, according to the local press. The firm expects to complete due diligence on the EGP 140 mn acquisition before the end of this month, paving the way for contracts to be signed by the end of year. Dice was said in April to have been exploring the possibility of an EGP 100 mn medium-term loan from CIB to partially fund the acquisition with the remaining amount coming from its cash reserves. The company finished in August preparing an EGP 25 mn, Borg Al Arab facility that it expects would be working at a 100% capacity by the beginning of next year.

M&A WATCH- Ebtikar raises its stake in Masary for the fifth time, buying up another 5.9%: Ebtikar Financial, a joint venture between MM Group and B Investments, has acquired a further 5.9% stake in e-payments firm Masary in a EGP 25.9 mn transaction, the company said in an EGX disclosure (pdf). This latest transaction, which marks the fifth time Ebtikar has raised its stake in Masary, will increase Ebtikar’s ownership to 65.5% and MTI's to 44%. Sources from Ebtikar had signaled the company’s intention to buy up more of Masary when it last purchased a 4.8% stake earlier this month. Ebtikar IR manager Ashraf Ghannam had told the local press last month that the company is not angling for full ownership of the e-payments firm. Ebtikar had acquired a 10% stake in Masary in July, and another 9.1% stake in September.

Shell to start work on three oil and gas concessions in 2H 2020: Shell plans to begin operations at three oil and gas concessions it won in February during 2H 2020, Gerald Schotman, executive vice president upstream of JVs, told Reuters. Shell will drill six wells in West Fayoum, five wells in South East Horus, and three wells in South Abu Sennan after winning exploration rights in tenders issued by the Egyptian General Petroleum Corporation and EGAS.

Shell eyes new Red Sea, Mediterranean bid rounds: The company has applied to participate in a bidding round Egypt is holding for oil and gas drilling in the Red Sea, and is interested in participating in any future tenders for Mediterranean concessions, Schotman said.

Egypt’s foreign debt rose increased to USD 108.7 bn at the end of 4Q2018-2019, up 17.3% y-o-y from USD 92.6 bn at the end of June 2018, according to the Central Bank of Egypt’s monthly statistical bulletin (pdf — pp. 66, table 38). External debt rose 2.3% on a quarterly basis from USD 106.2 bn on 31 March.

MOVES- Soha El Turky (LinkedIn) is set to leave Banque du Cairo to become vice president and chief financial officer at the European Bank for Reconstruction and Development (EBRD), according to an EBRD statement. El Turky is the first person from our neck of the woods (EBRD calls it the “southern and eastern Mediterranean region”) to be part of the bank’s executive committee. She was most recently CFO at state-owned Banque du Caire and previously held the same position at Abu Dhabi Islamic Bank in Cairo. She will take up her position in 2020, replacing András Simor, who retired earlier this year.

The 19th century “master photographer” captivated by Egypt: Startling pictures of Egyptian landscapes and temples, taken by enigmatic young photographer John Beasley Greene, have fascinated generations of scholars, arts critic Richard B. Woodward writes in the Wall Street Journal. Now an exhibition at the San Francisco Museum of Modern Art, Signs and Wonders: The Photographs of John Beasley Greene, brings together a small collection of his negatives, albums and prints. Lauded for their minimalism, stark lines and the interplay of light and shadow, many of his photos captured the walls and columns of Egyptian temples and palaces, like this image of Karnak. Greene visited Egypt three times in his short life, often recording hieroglyphics that Egyptologists back in his home country of France would study and translate. He died in Cairo aged 24, probably of tuberculosis.

Leading the conversation in the foreign press this morning: Egyptian archaeologists have found the biggest trove of coffins since the 19th century in Luxor, the Antiquities Ministry said in a statement yesterday. The team found a “distinctive group of 30 colored wooden coffins for men, women and children” at the Al Asasif cemetery on the west bank of the Nile, it said. Reuters│Associated Press│ABC│Sky News│Xinhua│Deutsche Welle│RT│NBC│CBS│Daily Mail.

The recent wave of arrests is still getting attention, after the UN human rights office on Friday urged Egypt to release citizens who have been detained in connection with anti-government demonstrations last month. Reuters picked up the statement, which called on authorities to free journalist Esraa Abdel Fattah, blogger Alaa Abdel Fattah, and his lawyer Mohamed El Baqer. An editorial in the Washington Post claims that the detention of journalists and human rights advocates will strengthen the legitimacy of Islamist groups, while an opinion piece by Ezzedine Fishere argues that the combination of economic reforms and repression is increasing political volatility in the country.

The government on Friday released more than 100 people detained following the protests, the Egyptian Center for Economic and Social Rights said, according to the Associated Press.

Egypt has permanently stripped a pilot of his license after he allowed Egyptian actor and singer Mohamed Ramadan to fly a private plane during a flight to Saudi Arabia, the BBC reported. The New York Post and Sputnik also have the story.

Reports of [redacted] assault on African refugee women increase: Local NGOs say that there has been a notable increase in the amount of [redacted] violence directed towards African refugee women. Reuters interviewed five women from Sudan, South Sudan and Somalia about their experiences.

A diver in Egypt’s Red Sea has captured footage of an up close and personal swim alongside a large moray eel (watch, runtime: 00:28). The eels, which can grow to up to 3 meters and weigh roughly 30 kg, are often found moving through coral reefs, their flexible bodies allowing them to wend their way through the narrowest passages.

El Araby Group is mulling setting up a new complex in Assiut to manufacture home appliances, the governorate said, without disclosing details on the expected timeline or project value. El Araby previously said it will inaugurate a EGP 600 mn washing machine factory in 4Q2019 as part of plans to build 12 factories in Beni Suef by 2022. The company had planned to increase its business to USD 100 mn in 2019.

Cairo for Investment and Real Estate Development (CIRA) has made a 10% down payment for a EGP 479 mn land plot in Badr City, the company said in a bourse disclosure (pdf). CIRA will add seven new colleges to Badr University on the 76.5 feddan (321k sqm) plot. It was allocated by the New Urban Communities Authority under a new mechanism announced earlier this year which requires investors and developers to make a 10% “commitment deposit” within 30 days of approval.

The first SwissAir flight to Marsa Alam landed on Thursday with 143 tourists onboard, according to Al Shorouk. An airport official said that three other European airlines will begin operation direct flights to the Red Sea resort town by the end of the year. The airport received the first flight from Milan since 2010 earlier this year.

Egypt is looking to launch in six months’ time cheap flights between Cyprus’ Paphos and Alexandria, Governor Abdel Aziz Konsowa said during a press conference to mark the arrival of the first Salamis Filoxenia cruise ship. Alexandria and Paphos officials are also in talks to set up regular cruises between the two cities that would run twice a week. This week’s trip was part of an agreement signed with Paphos 10 months ago.

EgyptAir will begin operating two flights a week between Cairo and China’s Hangzhou by the end of November, Chairman Ashraf El Kholy told Al Shorouk.

The government will select in January the winning bid in the Sixth of October dry port tender, said Transport Minister Kamel El Wazir, according to the local press. Hassan Allam and Elsewedy are each in a consortium with international companies, that include Concord, Malaysia’s PSA, Schenker Egypt and 3A International. These two consortiums are the only two competing for the tender. The ministry denied reports in the local press in September that it had awarded the tender to Hassan Allam and Samcrete, saying that it was still reviewing technical offers and that Samcrete was not attached to one of the consortiums.

Egypt’s EGP 200 bn sovereign wealth fund is considering setting up several sub-funds to channel investment into the logistics, renewables, and manufacturing sectors, said Planning Minister Hala El Said. The minister also said that the SWF’s newly-appointed CEO Ayman Soliman started drumming up investor interest for the fund during the Egypt Can conference last week.

AltShift, the first zero-waste festival in Egypt took place yesterday at the Greek Campus, bringing together startups, innovators, NGOs, and alternative marketplaces to spread ideas and knowledge about sustainable development, according to Egyptian Streets. The festival featured a full day of music and was organized by Ouishare and the Festival Internacional De Innovacion Social.

One small step for Egypt: An Egyptian astronaut is going on a mission to the International Space Station (ISS), head of the Egyptian Space Agency Mohamed El-Qousy said, according to Ahram Online.