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Thursday, 1 September 2022

THIS MORNING: Fresh measures to ease imports crisis could be on their way + The social safety net widens today

Good morning, wonderful people, and welcome to September. We hope those of you whose kids are not already back in school are able to enjoy what we think is effectively the last weekend of summer.

We have a busy news well and an absolutely packed What We’re Tracking Today for you, so read on, friends, and we’ll get to the weekend soon enough.

Oh, and before you do: A huge THANK YOU to all of you who have written in with kudos, comments and suggestions for Enterprise Climate. We’ll get back to each and every one of you in the coming days. Writing to you folks each day is the highlight of our professional career. 🙂


WATCH THIS SPACE #1- It looks like the IMF has just concluded its second bailout in four days: The IMF will today announce a preliminary agreement for an emergency loan to Sri Lanka, Reuters reported overnight, citing four sources it says are close to the talks. The sources didn’t disclose the size of the program. Sri Lanka is facing its worst economic crisis in over seven decades and in July defaulted on its debt for the first time in its history.

This comes just a few days after the Fund came to an agreement with Pakistan for a USD 1.1 bn loan package to save the country from default.

Are we next in line? We’re still ironing out the final details of our own IMF facility, which BNP Paribas is now predicting will be in the USD 3-5 bn ballpark and could be announced in September or October. We have the full rundown in this morning’s Economy section, below.


WATCH THIS SPACE #2- More measures to ease the import bottlenecks could be imminent: The Central Bank of Egypt could announce today or tomorrow its own measures to tackle the crisis in Egypt’s ports, where thousands of containers have been prevented from entering the country due to import restrictions introduced in March to address a shortage of foreign currency. This came from the head of the Customs Authority, El Shahat Ghatoury, who told Salet El Tahrir yesterday that the central bank could allow importers to pay open letters of guarantee in exchange for the immediate release of their shipments until they are able to retrieve a Form 4 to receive their letter of credit (L/C) (watch, runtime: 5:38). This would give them a grace period of six months, he added. This came a day after the Finance Ministry announced a raft of emergency measures to allow importers to clear shipments from the nation’s ports.

SPEAKING FOR ITSELF- Prime Minister Moustafa Madbouly is meeting daily with the new central bank governor, Hassan Abdalla, to discuss economic policy, cabinet said yesterday, without giving anything else away. Abdalla’s entry into the central bank two weeks ago has brought with it speculation about a possible policy u-turn on the currency and the bank’s Tarek Amer-era import rules. A firm consensus of Egypt-watchers now expect the EGP to fall against the USD in one way or another while a number of senior government officials have in recent days telegraphed a possible relaxation of import restrictions that have prevented many importers from accessing letters of credit.

Just as we were about to dig out those Ever Given memes… A 252-meter-long Singapore-flagged oil tanker — Affinity V — was close to being renamed Ever Givem II yesterday after it ran aground in the Suez Canal and blocked traffic. Thankfully, the Suez Canal Authority and its fleet of tug boats managed to release the vessel after five hours, sparing us the ignominy of single-handedly halting global trade twice in two years. (AP | Reuters | Daily Mail)

***Tell us how you’re feeling about your business and the wider economy and we’ll be back with the results just in time to give you a sense of what everyone else is thinking heading into budget season.

How has 2022 been for your business? And how do you feel about what’s left of the year? Are you investing? Do you plan to hire new staff (or make cuts to your existing staff) now or in 2023? What’s the USD / EGP rate you expect to use for your 2023 budget? Where do you see your industry as a whole heading?

Make your voice heard in our Fall Reader Survey. It won’t take more than a few minutes to complete.

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WHAT’S HAPPENING TODAY-

The social safety net gets a bit wider today: Today another 900k families will be included in the Takaful and Karama program — and ration card holders will start to receive increased allowances for the next six months.

Rations are rising by more than we thought: Each one-family ration card will now see an EGP 300 increase in credit rather than EGP 100 as previously announced, state news agency MENA reported yesterday.

…and the gov’t will up its spend on bread subsidies: The government will Increase its allocations to the bread subsidy program by EGP 32 bn, bringing its total allocations to the program during the current fiscal year to EGP 87 bn. The measures come as the government steps up its support to vulnerable people in response to the surging cost of living.


M&A WATCH- We’re halfway through Expedition Investment’s mandatory tender offer for Domty and so far shareholders have so far agreed to sell 14.3% (40.46 mn) of their shares in the cheesemaker, Al Borsa reported yesterday. This accounts for nearly half of the shares eyed by Expedition, which is looking to acquire 34% of the company. Shareholders have until Wednesday, 14 September to make a decision.

FinMin doubles down on fiscal discipline: The Finance Ministry has concluded a review of ministerial “private funds” and will move to regulate them more closely starting in January 2023, Finance Minister Mohamed Maait said in a statement. The move comes to improve management of public finances, Maait said, without giving any more details. President Abdel Fattah El Sisi in February ratified a bill that provides for 5-15% of the annual surplus generated by private funds to be transferred to the state treasury, which is expected to raise EGP 2.5-3 bn for state revenues.

SOUND SMART- “Private funds” are ministerial-level slush funds through which some ministers are able to generate and retain earnings from a range of activities and then use the funds to support programs of their choosing, effectively putting those funds outside the formal budget process.

A new month begins, kicking off our monthly list of data points to keep your eye on:

  • PMI data: Data measuring activity in Egypt’s non-oil private sector will be released on Monday, 5 September.
  • Foreign reserves figures for August should be out during the first week of the month.
  • Inflation figures: Inflation data for August from CAPMAS will land on Saturday, 10 September. Expect the Central Bank of Egypt to follow up on Sunday, 11 September with its inflation report.
  • Interest rates: The Central Bank of Egypt’s Monetary Policy Committee meets on Thursday, 22 September to review interest rates.

enterprise

THE ROAD TO COP-

Around 35k people have so far registered to participate in COP27 in Sharm El Sheikh, Saber Othman, head of local organization Earth’s Climate for Sustainable Development Foundation (EC4SDF), which is one of the observer NGOs for the summit, told reporters on Monday. Last year’s COP26 summit in Glasgow was attended by more than 40k people.

Plans to launch carbon credits in Egypt are alive and well: The Financial Regulatory Authority is holding consultations about plans to set up a local carbon market, it said in a statement Wednesday. The idea of launching carbon credits in Egypt has been around for a few years and has been pushed by the Environment Ministry and the EGX under its former boss (and now head of the FRA) Mohamed Farid. In February the two sides were said to be preparing to present the plans to the cabinet but nothing has been heard since. Carbon credits are tradable certificates designed give companies incentives to lower emissions.

Gov’t taps Moharram & Partners for COP consultations: Our friends at public policy firm Moharram & Partners will be the government’s partner for COP27 consultations, the firm said in a statement (pdf). Moharram & Partners will work to coordinate between the private and public sectors and support their green transformation efforts ahead of the November conference in Sharm El Sheikh.

MARKET WATCH- The Fed will resort to recession to kill inflation, Bloomberg says: Federal Reserve Chairman Jerome Powell looks set to jettison hopes for a soft economic landing and will resort to intentionally provoking a recession in order to curb inflation, Bloomberg writes. The Fed has up to now insisted that it is possible to raise interest rates and reduce inflation without damaging the economy. But with the labor market showing no signs of softening and supply-side inflationary pressures not going away, the business newswire has concluded that the central bank now feels it has no option but to trigger a so-called “growth recession” and kill demand.

Meanwhile, over in Old Blighty: A British think tank has warned that people in the UK are set to face the biggest decline in living standards in a century unless the government comes up with radical solutions to address the series of crises engulfing the country, Bloomberg reports. Mns of people are set to be pushed into poverty this winter by surging energy bills, while the country suffers the worst spike in inflation in the G7, with some economists expecting it to rise as high as 22% next year. We have more on the latest batch of troubling figures coming from our neighbors to the north in this morning’s Planet Finance, below.

THE BIG STORY ABROAD- The Donald is back in the global press: The US Justice Department has accused former president Donald Trump of deliberately concealing classified documents from the FBI, and yesterday published photos of papers seized from his Florida estate in the raid last month. (Reuters | NYT | WSJ | Washington Post | The Independent | The Guardian)

CIRCLE YOUR CALENDAR-

The third Egypt- and UN-led regional climate roundtable takes place today in Santiago: The two-day event will see climate negotiators discuss climate finance with private- and public-sector stakeholders ahead of the COP27 summit in November.

The German-Arab Chamber of Industry and Commerce will commemorate 70 years of German-Egyptian business and economic ties with a gala celebration on 15 September.

National dialogue agenda drops: The National Dialogue’s board of trustees will hold a meeting on Saturday, 3 September to set the agenda for the dialogue and choose rapporteurs for the involved committees.

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

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We have tons more in the pipeline — come help us build new publications. We offer the chance to work in a fast-paced newsroom on a broad range of topics and in a variety of formats. Our goal is simple: To create value for our growing community of >199k readers by telling stories that matter.

We’re looking for editors who want to run publications and teams, editors to help reporters craft stories, and talented reporters. Egyptian and foreign nationals alike are welcome to apply. So are job-switchers: If you’re an equities analyst tired of the rat race, we’re a great place to come work.

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Correction: 3 September 2022

A previous version of this story incorrectly stated that the FRA was holding consultations to introduce a carbon offset tax.

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