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Monday, 28 March 2022

A mixed bag on the airwaves: IMF assistance, high speed rail, and more complaints about L/Cs

There was more speculation over what an IMF program might look like on the airwaves last night: MP Fakhri El Feki, head of the House Planning and Budget Committee, offered a few of his own guesses in a phone-in with Kelma Akhira’s Lamees El Hadidi (watch, runtime: 6:09). The MP floated the possibility of obtaining a USD 3 bn precautionary and liquidity line or a new extended fund facility under which the IMF lent Egypt USD 12 bn back in 2016. Deputy Planning Minister Ahmed Kamaly also chatted via phone with El Hadidi (watch, runtime: 14:41), reiterating that the government is preparing to make spending cuts in the coming fiscal year.

Background: The government has requested support from the IMF to mitigate the impact of the war in Ukraine on its economy, though it remains unclear what kind of assistance the Fund is willing to offer.

High-speed rail: Coming June 2024. The first phase of the high-speed electric railway — connecting Ain Sokhna to Matrouh — will start operating in June 2024, Transport Ministry Kamel El Wazir told Ala Mas’ouleety’s Ahmed Moussa in a phone-in (watch, runtime: 6:02). German rail operator Deutsche Bahn has applied to operate the first line of the high-speed service, and the ticket price will be decided in coordination with the Egyptian government, the minister said (watch, runtime: 4:16).

Background: In September, the government signed a USD 4.5 bn contract with Siemens Mobility, Orascom Construction and Arab Contractors to build the first 660-km phase of the line. The entire USD 23 bn project will see the line eventually expanded 1.8k km across the country, linking Cairo, Aswan, the North Coast and the Red Sea.

Clothing manufacturers are the latest to warn of the negative impact of mandatory L/Cs: Some apparel factories will have to temporarily halt operations due to the repercussions of the Central Bank of Egypt’s decision to require letters of credit for purchases, said Marie Louis, head of the Apparel Export Council, in a phone-in with El Hekaya’s Amr Adib (watch, runtime 3:46). As of this month, banks have required most importers to use letters of credit to import goods after the CBE banned the use of documentary collection. Tobacco manufacturers warned last week that the rules were forcing companies to hike prices.

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