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Wednesday, 24 July 2019

What we’re tracking on 24 July 2019

Good morning, folks, and welcome back to the second half of our shortened work week.

We should find out today whether the IMF’s executive board will sign off on disbursing the final USD 2 bn tranche of our USD 12 bn loan. Egypt reached a staff-level agreement with the IMF back in May after the fund completed its fifth review of the economic reform program. The board has delayed making a decision for more than two months, presumably waiting for Egypt to follow through on its pledges to cut energy subsidies.

After months of lavishing praise on our commitment to the reform program, we see no reason for an about face that would cause the IMF to withhold the funds. Assuming everything goes to plan and the board votes in favor today, it’s possible we will see the funds arrive either tomorrow or early next week.

The World Bank is back in town: A World Bank team is in Egypt to assess the business environment ahead of its 2020 Ease of Doing Business report to be published later this year. The delegation has already met PM Moustafa Madbouly, who discussed his cabinet’s effort to increase Egypt’s ranking in the cross-border trade and contract enforcement indices according to a cabinet statement. Egypt jumped eight spots in the 2019 report to rank 120th out of 190 countries.

East Med Gas Forum meeting tomorrow: A second meeting to discuss establishing a regional gas forum in the Eastern Mediterranean is taking place in our fair city tomorrow, reports Al Shorouk. Energy ministers from the US, Israel, Cyprus, Greece, Italy, Jordan, Palestine, and Egypt are set to attend, alongside a representative from the European Commission for Climate Action and Energy. A series of preparatory meetings are scheduled for today. The first gas forum meeting took place at the start of the year. The participants agreed to establish an intergovernmental regional gas market, and designated Cairo as the incipient organization’s headquarters.

Could Lebanon soon become the forum’s eighth member? Beirut is in talks with Cairo and Larnaca on oil and gas cooperation, Lebanese Energy and Water Minister Nada Boustani said, according to Lebanon’s Annahar newspaper. Talks with Egypt involve reopening idle sections of the Arab Gas Pipeline.

We were on the receiving end of some Trump love yesterday: The Donald sent us a message yesterday to mark the anniversary of the 23 July revolution. “The United States values our close cooperation on counterterrorism and security, and seeks to deepen our partnership on inclusive economic growth and greater educational and cultural ties,” the message reads.

We need to talk about our foreign debt levels: The rapid accumulation of foreign debt over the past decade threatens to hurt Egypt’s future growth prospects, Amr Adly writes for Bloomberg. Egypt’s ratio of foreign debt to gross national income (GNI) more than doubled to 36% from 17% between 2010 and 2017. Over the same time period, the ratio of debt to total exports surged to 190% from 75%, suggesting that the country will find it increasingly difficult to service its debt obligations. This “alarming” growth in external debt will further reduce foreign direct investment and impede growth if left unchecked, Adly says.

Global trade and the international capital markets aren’t in the best shape right now, so the best path to sustainable growth is local investment in sectors that can deliver real economic growth, boost exports and reduce dependency on imports, Adly argues. Deepening regional integration will not just increase the flow of goods and services, but Egypt could also stand to benefit from transfers of technology and skills from the Gulf, which would help the country to kick-start more high-value added industries.

Saudi Arabia is finally clocking the power of wind: Riyadh plans to build its first wind power plant and begin generating electricity within three years, Bloomberg reports. The planned 400-MW Dumat Al Jandal facility is expected to begin operations in 1Q 2022, and will be constructed by France’s EDF and Abu Dhabi’s Mubadala Investment (Masdar). The project is part of Saudi Arabia’s push to increase its renewable energy facilities and diversify its oil-reliant economy.

Boris Johnson has become the UK’s next prime minister, beating rival Jeremy Hunt to be elected as the new leader of the Conservative party. The former foreign minister and London mayor will step into Theresa May’s shoes today. He’s promising to both deliver Brexit by 31 October and “unite the country.” We’re not holding our breath.

Nassef Sawiris now the fourth richest person in Africa: The fortune of b’naire tycoon Nassef Sawiris has risen by a cool USD 1.5 bn in recent months to reach USD 7.9 bn, according to Forbes. This follows the conclusion of a partnership agreement between Orascom Construction Industries and Abu Dhabi National Oil Company (ADNOC), as well as Aston Villa — which he co-owns — qualifying for the Premier League. The OCI NV-ADN OC partnership will create the region’s largest producer and exporter of nitrogen fertilizer, in which OCI NV will hold a 58% stake.

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