THIS MORNING: No IMF loan agreement out of DC + Is it raining yet?
Good morning, friends. We hope you had a wonderful weekend.
THE BIG STORY here at home is the Neverending Story that is the talks between Egypt and the IMF on a new assistance package. Today marks the last day of the IMF / World Bank meetings — and officials yesterday dashed our hopes of any big breakthrough.
A meeting between IMF and Egyptian officials yesterday ended with the two sides only saying they expect to reach an agreement on the long-awaited package “very soon.” We have the full rundown in this morning’s newswell, below.
SIGN OF THE TIMES #1- CIB the latest to raise USD CD rates: The country’s largest private lender raised interest rates on three-year USD certificates of deposit to 5.25%, according to Al Mal. We saw similar moves last week by state-owned lenders Banque du Caire, National Bank of Egypt and Banque Misr. A number of banks are raising rates to pull in USD liquidity after recently imposing caps on the use of foreign exchange abroad and online.
SIGN OF THE TIMES #2- “Diesel hits chaos mode in fresh blow for global economy,” blares the headline at the top of Bloomberg’s homepage this morning. Europe isn’t ready for a ban on Russian imports that’s less than four months away. French refineries are on strike. And the US has the lowest seasonal inventories since 1982. You may now thank Ahmed Heikal for the Egyptian Refining Company, which slashed our diesel imports by as much as 30-40%.
DATA POINT- Egypt registered a primary surplus of 0.11% of GDP in the first quarter of the 2022-2023 fiscal year, according to a Finance Ministry statement. Finance Minister Mohamed Maait shared the figure in separate meetings with staff at ratings agencies Moody’s and S&P Global, according to a statement. Maait also said efforts to digitize the tax system had led to a 20% y-o-y increase in tax revenues in the July-September period. The Madbouly government is targeting a primary surplus of 1.6% for the year. Reuters also took note of the news.
PSA- First rain of the fall? There’s a slim chance (c. 40%) of light rain in parts of Greater Cairo this morning — and a much better possibility (c. 70%) that Alexandria and other parts of the northern coastline will see showers throughout the day today, according to the national weather service. Nighttime in Cairo will hit lows of 21°C this week, with daytime highs reaching 27-28°C.
HAPPENING THIS WEEK-
Bread reform committee should get House approval: The House could approve as early as today Supply Minister Ali El Moselhy’s proposal to form an ad hoc committee to look into possible changes to the country’s massive bread subsidy program.
The House will also discuss amendments to the Agriculture Law today that would introduce harsher penalties for illegally building on agricultural land. Under the amendments, illegally building on agricultural land could cost up to EGP 10 mn and up to five years in prison. The House’s Legislative and Constitutional Affairs Committee approved the amendments earlier this month.
The auto bill that would regulate EV assembly (among other facets of the industry) is up for debate on Monday. “As it is a priority for the government, the bill could get a final approval in the House next week,” head of the House Industrial Committee Moataz Mahmoud told us last week.
What auto bill? The bill would set up a new regulatory body to set policies to localize the auto industry, including electric vehicles. Enterprise Climate has a deep dive.
Education Minister Reda Hegazy will answer questions in the House at some point this week, including on a shortage of public schools and teachers, the national curriculum, and a rise in private school tuition fees. Hegazy is also set to be asked about the state of public school buildings after the death of a child in a Giza school when a staircase collapsed made national news.
THE BIG STORY ABROAD over the weekend has been the slow-motion car crash that continues to unfold in UK markets / politics. PM Liz Truss won’t or can’t let go of the steering wheel as the car veers ever further from the road. She has managed to let go of former chancellor Kwasi Kwarteng, who has been replaced by Jeremy Hunt. Hunt admitted that Truss had made “mistakes” and warned of “difficult decisions ahead.” Brace for tax hikes, not tax cuts (listen, runtime: 14:29).
On Monday, the markets speak: The GBP fell against the USD and yields rose on Friday after Truss fired Kwarteng and said that parts of her disastrous mini-budget would be rolled back. Monday’s open will indicate whether markets have more trust in Hunt. (Reuters | CNBC | FT)
WATCH THIS SPACE #1- China’s Communist party is expected this week to appoint Xi Jinping to an unprecedented third term in office, making him “China’s most powerful leader since Mao Zedong,” the Western press writes. From the Financial Times to the Guardian, the New York Times, BBC, and the Wall Street Journal, Xi is everywhere this morning, with headlines including “China’s everlasting emperor awaits his third term” and “Xi Jinping is on the brink of total power.” The party congress kicks off today.
WATCH THIS SPACE #2- Apple is expected to launch new M2-powered iPad Pros “within days,” Bloomberg’s Mark Gurman reports. Don’t expect a new industrial design, he warns — and new Macs? Those probably aren’t coming until November, he reports.
OTHER THINGS worth knowing about this morning:
- For the advertising nerds among us: Dan Wieden has died. The Wieden + Kennedy co-founder penned remarkable campaigns and came up with Nike’s “Just do it” tagline. The New York Times and AdAge have obits and Nike’s Phil Knight remembers the iconoclastic adman here.
- Jamie Dimon thinks we can all look forward to plenty more volatility in markets for so long as the US Federal Reserve continues to boost rates and shrink its balance sheet. Last month’s near-explosion of dozens of UK pension funds was just the beginning, the JPMorgan CEO suggests.
- Meta’s metaverse product, Horizon Worlds, isn’t getting much traction with users — or with the company’s own staff (Wall Street Journal | Daring Fireball)
COUNTDOWN TO COP (21 days to go)-
Cairo Water Week kicks off today and runs until Wednesday, 19 October. Some 18.5k attendees from 90 international and regional organizations are convening at the Nile Ritz Carlton in Cairo for the event, according to its website. The focus of this year’s edition is on preparations to discuss water resources at COP27. Catch the full agenda here.
Tomorrow sees the fifth Egypt and UN-led regional climate finance roundtable ahead of COP27, in Geneva, Switzerland. Catch our recent Going Green story on how the roundtables aim to secure investment for climate projects in developing nations ahead of COP27
Take our EV survey: Are you an ex-petrolhead shopping around for your first electric vehicle? EV-curious and wondering what all the fuss is about? Or are you not ready to say goodbye to that sweet smell of benzene as you wait at the gas station?
We want to hear from you: We’re taking the pulse on how the nation feels about Egypt’s nascent EV transition. Take a few minutes to fill out our short survey. We’ll be back with the results in a couple of weeks.
CIRCLE YOUR CALENDAR-
The Madbouly government’s economic conference takes place Sunday-Tuesday next week. We’re hoping for more details in the coming days.
Egypt and the UAE will host a two-day conference marking 50 years of bilateral ties. The gathering will take place 26-28 October and is being produced in association with the two governments.
The EGX is looking to drum up interest in listed companies on a roadshow to Dubai and Abu Dhabi later this month, an EGX source told Enterprise. The bourse has tapped Al Ahly Pharos to help manage the roadshow, with EGX boss Rami El Dokany set to meet with as many as 100 regional and international financial institutions, the source said.
Fuel prices to rise this month? We’re expecting the government to hike fuel prices for the seventh consecutive quarter when the fuel pricing committee meets this month. Fuel prices have risen by as much as 28% over the past 18 months in response to heightened international oil prices, which surged earlier this year on the back of Russia’s invasion of Ukraine.
Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.
*** It’s What’s Next day: We have our weekly deep-dive into what makes and shapes pre-listed companies and startups in Egypt, the UAE and KSA, touching on investment trends, future sector insights and growth journeys.
In today’s issue: The global economic slowdown has caught up with Egypt, with VC funding across the board tightening amid fears of recession. Recently, local stakeholders have become a bit more worried about what comes next and how to position Egypt as an attractive startup market. We sat down with general partner at fintech fund Nclude Basil Moftah to break down what investors and startups can learn from the downturn and what Egypt’s pitch to international VCs should look like going forward.