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Monday, 9 May 2022

Rate hikes leave gov’t with at least EGP 6 bn in unexpected debt costs

FinMin needs at least another EGP 6 bn for debt repayments: The House Budget Committee has approved legislative amendments that would unlock an extra EGP 6 bn to help Egypt meet its debt repayments as interest rates rise at home and abroad, Youm7 reports.

But that’s not likely going to be enough: It doesn’t appear that the Finance Ministry was prepared for the Federal Reserve to be quite as hawkish with its tightening cycle, penciling in a quarter-point rate hike instead of the 50-bps increase we saw last week. A Finance Ministry official said at the committee meeting yesterday that the amendment was drafted before the Fed’s decision. This leaves the ministry facing higher-than-expected payments on USD-denominated debt, potentially requiring more than EGP 6 bn to cover the costs.

More rate hikes are coming: The Central Bank of Egypt may move to hike rates for the second time in two months when it meets next week, while the Fed has indicated that it will continue to tighten aggressively through the year as it tries to get a handle on soaring inflation.

Draft legislation aiming to tighten anti-money-laundering regulations has landed in the House and will now be reviewed by the House economic affairs and constitution committees, Speaker Hanafy El Gebaly said yesterday, Ahram Online’s Gamal Essam El-Din reported. The anti-money laundering bill aims to form an anti-money laundering unit affiliated with the Central Bank of Egypt (CBE). Cabinet signed off on the bill last month.

Also making its way to the House: The hajj will be regulated under a new bill that would set up a unified online portal for would-be pilgrims seeking travel visas to Saudi Arabia to undertake the pilgrimage. Data on the pilgrims will be available on the portal, with each pilgrim having a code number to be stamped on their passport.

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