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Sunday, 8 May 2022

THIS EVENING: Egypt is getting closer to finalizing the 2022-2023 budget + Egypt’s non-oil private sector contracted again in April, albeit at a slower pace

This busy news week appears to be starting with a slow Sunday. Don’t let today lull you, ladies and gentlemen, as all our key macro indicators are coming up and the next fiscal year’s budget looks set to be introduced to the House of Representatives — all this week.

THE BIG STORIES TODAY-

#1- Details are out on next year’s fiscal budget: The Finance Ministry is forecasting that the budget deficit will narrow to 6.1% of GDP in the latest draft of the FY 2022-23 budget, Bloomberg Asharq is reporting, citing an official document it has seen. The government is aiming to shrink the debt-to-GDP ratio to 84% next fiscal year. The Finance Ministry has also penciled in oil prices of USD 80 per barrel — up from USD 60 per barrel this fiscal year — and an average wheat price of USD 330 per ton, up almost 30% on last year as war in Ukraine plays havoc with the global commodities markets.

Finance Minister Mohamed Maait will present the draft FY 2022-2023 budget to the House of Representatives’ general assembly tomorrow. Last month the House voted to send the draft FY 2022-2023 budget to the budget and planning committee. Planning Minister Hala El Said will present the draft economic and social development plan to the House during the same session.

#2- Egypt’s non-oil private sector contracted again in April, albeit at a slower pace, according to S&P Global’s purchasing managers’ index (PMI) survey (pdf). The index registered 46.9 in April, up from 46.5 in March but still below the 50.0 mark that separates expansion from contraction and marking “a solid deterioration in business conditions” that was the second-fastest since June 2020 thanks to ongoing fallout from the Ukraine war. The PMI reported that construction broadly bucked the trend as the “only bright spot,” with an uptick in activity and new orders. Industry players reported a marginal softening of input price inflation — but many opted to absorb higher costs instead of passing them onto consumers, according to the survey.

THE BIG STORY ABROAD- It’s a toss-up between (you guessed it) updates from the Russia-Ukraine war and the impact of covid-19 lockdowns on China’s economy.

IN CHINA: Authorities in Shanghai are imposing tighter covid-19 restrictions in a bid to contain a breakout that began several weeks ago, with the lockdown pushing up unemployment figures and further straining global supply chains and international trade, Reuters reports, citing sources with knowledge of the matter. The lockdowns are expected to spell a “complicated and grave” situation for unemployment, Chinese Prime Minister Li Keqiang said, according to a statement.

IN UKRAINE: Russian forces reportedly bombed a school in a village in Ukraine’s eastern Donetsk region yesterday, where residents appear to have been taking shelter, potentially killing as many as 60 people, Reuters reports, citing the regional governor.

** CATCH UP QUICK on the top stories from today’s EnterpriseAM:

  • Privatization program back in action this September: Egypt plans to offer shares in state companies on the EGX starting in September, Public Enterprise Minister Hisham Tawfik said. The minister said the move had been delayed until after the summer, without providing further details on the companies to be listed.
  • More on the Sisi administration’s plans to boost the economy: The state’s plan to attract USD 40 bn in fresh investment by opening the door to “private sector participation in state-owned assets” led coverage of President Abdel Fattah El Sisi’s televised speech at the “Egyptian family iftar” event (watch, runtime: 1:03:23) before the Eid break. El Sisi used the speech to announce several initiatives to help strengthen Egypt’s economy and industry, increase private sector investment, and reduce public debt.
  • We could be getting Ukrainian wheat through Polish and Lithuanian seaports: Polish President Andrzej Duda will visit Egypt next month to coordinate ways to ship Ukrainian wheat to Egypt amid the war, potentially through Polish seaports, Duda said. Both Poland and Lithuania are reportedly in talks with Ukraine about exporting its summer grain harvest through their ports in a bid to circumvent Russia’s blockade of the country’s Black Sea ports, which has resulted in some 25 mn tons being currently stuck in the country.

enterprise

*** It’s Inside Industry day — your weekly briefing of all things industrial in Egypt. Inside Industry focuses each Sunday on what it takes to turn Egypt into a manufacturing and export powerhouse, ranging from initial investment and planning to product distribution, through to land allocation to industrial processes, supply chain management, labor, automation and technology, inputs and exports, regulation and policy.

In today’s issue: Although a number of manufacturers have told last month that they are successfully accelerating their adoption of industrial automation, a lot of manufacturers are still behind on the transition. Today, we look at what’s standing in the way of manufacturers, and what needs to be done before we see more of them making the shift.

FOR TOMORROW-

Officials from Brazil’s agriculture ministry will arrive in Cairo tomorrow to discuss upping nitrogen fertilizer imports from Egypt, the Arab Brazilian Chamber of Commerce said Thursday. The delegation will meet with Supply Minister Ali El Moselhy, Deputy Agriculture Minister Moustafa El Sayed, and private sector fertilizer and animal protein suppliers.

🗓 CIRCLE YOUR CALENDAR-

We’ve got a ton of data points and news triggers in the pipeline. Here are the key events you’ll want to keep an eye on:

  • Privatization strategy announcement: We’re expecting the Madbouly government to announce the details of its strategy to privatize state-owned firms and boost private-sector participation in the economy. Cabinet said yesterday that the PM will hold a presser this week to announce new measures to improve private investment and FDI;
  • Foreign reserves: Figures for April should be announced sometime this week;
  • State statistics agency Capmas’ monthly bulletin covering the price of key building materials is due out tomorrow, 9 May;
  • Inflation figures for April are due out on Tuesday, 10 May. Between the global environment, knock-on effects from the devaluation of the EGP, and the traditional inflationary hit thanks to Ramadan, you can expect the number to be a bit on the ugly side.

PLUS- The PSA world squash championships get underway in Cairo this Friday, 13 May. The men’s and women’s finals will be played on 22 May. There is USD 550k at stake for each of the men’s and women’s championships, making this the biggest purse on record for a squash tourney.

FURTHER AFIELD-

A huge US “GreenTech business mission” is inbound a week from today for a three-day visit. More than 40 US companies are heading to Egypt to kick the tires on green investment and potential business partnerships in sectors ranging from energy to healthcare, agriculture, aviation, construction and water resource management. The high-level delegation will meet with members of the business community and senior government officials. It’s being led by David Thorne (a top official in the office of the US special presidential envoy for climate) and Jake Levine (chief climate officer at the US International Development Finance Corporation).

ALSO-

  • The Central Bank of Egypt will meet to review interest rates on Thursday, 19 May.
  • The last of this season’s earnings releases will drop by 31 May after the Financial Regulatory Authority granted listed companies a two-week deadline extension.

PSA- Early-stage foodtech startups have until June to apply to the second edition of the UAE Ministry of Climate Change and Environment and Tamkeen’s global FoodTech Challenge, with an earnings pool of USD 2 mn, according to a statement (pdf). The challenge is looking to find “the next wave of technology innovations on the cusp of transforming traditional agriculture practices, efficiently and sustainably” specifically geared towards innovation in food production and food loss and waste. Partners supporting the competition include Aspire, ADQ, Silal and Emirates Foundation.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

☀️ TOMORROW’S WEATHER- Expect some warm weather tomorrow as the mercury rises to 37°C during the day before falling to 18°C at night, our favorite weather app tells us.

***
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