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Monday, 14 May 2018

CIB’s Hisham Ezz Al Arab, Banque Misr’s Mohamed El Etreby are happy with the economic outlook

Last night’s talk shows had plenty to offer by way of economic commentary, but the highlight by far was a sit-down on Al Hayah Al Youm to discuss the economic outlook for Egypt, starring our friend CIB Chairman and Managing Director Hisham Ezz Al-Arab and Banque Misr Chairman Mohamed El Etreby.

Egypt has largely regained the trust of local and foreign investors after undertaking a series of economic reforms, which did not start in earnest until 2014, Ezz Al Arab said. He piled on the praise for the “historic” decision to float the EGP back in November 2016, without which he said the market would have effectively ground to a standstill. Ezz Al Arab also reiterated previous calls to clear hurdles for the private sector to invest and help drive economic growth (watch, runtime: 5:39).

El Etreby concurred with Ezz Al Arab that the float was an important milestone in Egypt’s economic reform, reminding viewers of the days when the parallel market was running amok. The banking system is now faring much better, El Etreby said, pointing to several key figures to drive the point home. Prior to the float, hot money was less than USD 1 bn but the figure currently stands at USD 23 bn. Egypt’s banks suffered from a USD 6 bn shortage in foreign currency but now have a surplus of USD 13 bn. The banking sector’s assets also soared 147% between 2014 and November 2017 to reach EGP 4.865 tn. The volume of interbank transactions this year has thus far reached USD 14 bn, and overall loans disbursed from the banking sector now hover at EGP 1.441 tn, up from EGP 629 bn in 2014.

They two also took a moment to touch on Standard & Poor’s long-awaited upgrade of Egypt’s sovereign credit rating, saying that it’s an important indicator the country is moving forward in the right direction. Both Ezz Al Arab and El Etreby stressed that this should further motivate the government to press ahead with reforms.

You can watch full interview here (runtime: 1:16:02).

The upgrade was a long time coming but the delay is understandable considering Egypt’s high debt level, which is always a point of concern for agencies when considering a rating upgrade, Finance Minister Amr El Garhy told Hona Al Asema’s Lamees Al Hadidi. Agencies are usually wary of debt levels that exceed 100% of GDP, and Egypt’s reached 108% of GDP during the last fiscal year. As such, the government is doubling down on bringing own debt levels over the coming few years, the minister said (watch, runtime: 5:10).

Debt is certainly a concern, but more rating upgrades from other agencies could very well be in the cards for Egypt, particularly as the country’s reform program continues to bear fruit and earn international credibility, credit rating expert Amr Hassanein told Lamees (watch, runtime: 7:51).

The IMF delegation currently in town to review Egypt’s reform program should wrap up their work by week’s end, while the fourth tranche of the USD 12 bn facility should be disbursed by the end of June, El Garhy said (watch, runtime: 11:22).

Talking heads want metro commuters to spring for membership cards: In near-unison, Lamees (watch, runtime: 39:36), Kol Youm’s Amr Adib (watch, runtime: 6:37), and Masaa DMC’s Eman El Hosary (watch, runtime: 8:16) each urged viewers to consider buying a metro membership card rather than paying for individual tickets for each commute. They each pointed out that the move would be more cost-effective and would help reduce the burden of last Friday’s ticket price hikes. Easy to do for Lamees, Amr, Eman and anyone reading our fair morning briefing, but folks need to ask themselves if the working poor have the cash flow to do this.

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