Good morning, folks, and happy hump day. The week flies by when you kick it off with a public holiday — and even more so when you’re looking forward to a day that will be as busy as today is shaping up.

THE BIG STORY here at home is the Madbouly government’s move to make cuts to this fiscal year’s budget in what we’re reading as a bid to help conserve FX and tamp down on inflation. The PM has directed all but “essential” ministries to trim their spending, while new national projects that require foreign currency spending could be delayed as the government works to ease the FX shortage. We have the full story in today’s Economy section.

EGP WATCH- The EGP fell almost 2% against the greenback yesterday to a new low. In the first business day following the long weekend, the official EGP-USD exchange settled at EGP 27.63 from EGP 27.11 on Thursday. The currency is down 11.4% since its level immediately before the central bank allowed it to slip further against the USD on 4 January, and has now fallen 75% from its 15.78 / USD level immediately before the initial devaluation last March.

Where’s the market-clearing rate? Bloomberg suggests the (anemic) parallel market is still at about EGP 31 to the greenback, quoting Goldman Sachs analysis as saying “this signals that there is still a significant volume of unmet FX demand domestically.” But contrary to 2015 and 2016, the parallel market today is a poor indicator: It is small, caters primarily to individuals (thanks to deposit caps on cash), and pricing neither transparent nor consistent.

MEANWHILE- Appetite for the 25% CDs remains strong: As we note in Last Night’s Talk Shows, savers have now poured some EGP 155 bn into the high-yield instruments — up sharply from the EGP 100 bn figure we reported yesterday. The CDs are designed to encourage folks clinging to FX to de-dollarize as well as to suck up local currency liquidity in a bid to tamp down on inflation.

HAPPENING TODAY-

The IMF will hold a virtual press conference on its USD 3 bn financial assistance program with Egypt today at 4pm CLT, the institution said in an emailed statement over the weekend. The presser, held by IMF Mission Chief for Egypt Ivanna Vladkova Hollar, will coincide with the release of the IMF’s staff report on Egypt and other documents related to the extended fund facility.

What will they say? Look for the IMF to make clear that there’s no going back to a pegged exchange rate — and that it wants to see better fiscal discipline, more spending on the social safety net, structural reforms, and the state competing less with the private sector. The document will also lay out the schedule of biannual reviews of our progress, each of which will trigger the release of a portion of the funding.

We’re also hoping to hear details on the release of the first USD 347 mn of the facility, which the institution's executive board approved in December. The IMF has said it expects the facility to help Egypt access as much as USD 14 bn in additional liquidity from our regional and international partners. It won’t be deposits this time, though: The IMF said in December that it believes the fresh funding it will help us access will come from the state privatization program as well as through “traditional” channels such as debt.

ALSO- We might hear more about the government’s privatization plans today when Vice Minister of Finance Ahmed Kouchouk and Sovereign Fund of Egypt (SFE) boss Ayman Soliman discuss the newly-finalized state ownership policy document at an event (pdf) taking place at the Grand Nile Tower Hotel. The conference is being hosted by Thebes Consultancy and Eventor Event Management.

AND- It’s inflation day: The central bank and Capmas will release December’s inflation figures today. Inflation hit a five-year high in November on the back of the devaluation of the EGP and we can expect the acceleration to have continued last month as the impact of the weakening currency continues to feed through into the economy. A Reuters poll of 15 analysts puts the median forecast for last month’s inflation at 20.5%.

On the legislative agenda: Senators continue their two-day debate on how to integrate informal businesses into the economy today.

PSA- The Justice Ministry has launched its online national legislation database: Users can try out the platform — which offers up-to-date information on all the laws proposed, passed, amended, and elapsed — without charge for a week starting yesterday, according to a ministry statement. An unspecified subscription fee will be charged after the end of the demo week.

HAPPENING THIS WEEK-

China’s new foreign minister, Qin Gang, will visit Egypt as part of an African tour that started yesterday, the Chinese Foreign Ministry said in a statement on its website. Qin’s trip, which will draw to a close on January 16, will also see him visit Ethiopia, Gabon, Angola, and Benin. Formerly China’s ambassador to the US, Qin was appointed to the post at the end of December, replacing Wang Yi, who had held the role for a decade.

CIT Minister Amr Talaat is heading a delegation to India to drum up investment by Indian companies in our CIT sector, according to a ministry statement. On the first day of a weeklong visit, Talaat met members of the Confederation of Indian Industry (CII), where he showcased investment possibilities in digital transformation, data centers, outsourcing, and entrepreneurship. Talaat also held a meeting with Ranjeet Goswami, global head of corporate affairs at Mumbai-based multinational IT firm Tata Consultancy Services.

DATA POINT- Beshay Steel has hiked its steel prices by more than 15% to EGP 27.46k per ton, with Al Borsa reporting that competitors are likely to follow with similar increases this week after the latest weakening of the EGP. Steel prices reached a record high of EGP 30K per ton last month, before dropping to around EGP 23.2k per ton.

THE BIG STORY ABROAD remains the fallout of the riots that took place at Brazil’s Congress building on Sunday night. Brazilian authorities have now detained around 1.5k people in connection with the protests, the WSJ and Reuters report. Meanwhile, rightwing former president Jair Bolsonaro — whose supporters stormed the government complex — was admitted to a Florida hospital yesterday with stomach pains, according to Reuters.

FROM THE REGION- Qatari fund eyes Premier League clubs: Qatar Sports Investments is thinking of purchasing stakes in Manchester United, Liverpool FC, or Tottenham Hotspur following the success of the Doha-hosted World Cup, Bloomberg reports citing an unnamed source close to talks.

FROM THE US- Newly elected House of Representatives Speaker Kevin McCarthy took his seat for Congress’ first session yesterday, following a drawn-out voting process to put him in the job that exposed deep rifts within the Republican party. (NYT | WaPo | AP)

SIGN OF THE TIMES- China has set its sights on cornering another green energy market: Hydrogen, writes Bloomberg, noting that “policymakers in Europe and the US are racing to counteract early Chinese dominance of electrolyzers.” Electrolyzers allow producers to harness energy to split water into hydrogen and oxygen — their manufacture here in Egypt is among the potential bonanzas to local industry as Egypt embarks on a world-scale program to build out a green and blue hydrogen industry.

2023 brings the first post-pandemic hajj: Saudi Arabia will remove all covid-era restrictions and allow the number of pilgrims to return to pre-pandemic levels for this year’s hajj season in the summer, KSA authorities said in a statement (pdf). Access was restricted to vaccinated pilgrims aged 18-65 in 2022, when around 1 mn people made the journey to Mecca and Medina, down from some 2.6 mn in 2019. Only a small number of Saudi residents were allowed to perform the pilgrimage in 2020 and 2021.

MARKET WATCH- Kuwait is set to up its diesel exports to Europe fivefold in 2023 and double its airline fuel exports, Bloomberg reports, helping fill a small part of supply set to be lost when the EU’s ban on Russian refined oil imports kicks in on 5 February. Kuwait will increase diesel flows to Europe to some 2.5 mn tons — around 50k barrels a day — and up jet fuel exports to 5 mn tons. Diesel made up around half of the 1.3 mn barrels of Russian oil products that were shipped to Europe every day before the outbreak of war in Ukraine, according to the business news outlet.

CIRCLE YOUR CALENDAR-

The national dialogue will kick off on Saturday, 14 January.

Davos 2023: The usual suspects will descend on the Swiss town for the annual meetings of the World Economic Forum on 16-20 January.

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

*** It’s Going Green day — your weekly briefing of all things green in Egypt: Enterprise’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices and how you can make your business greener, whatever the sector.

In today’s issue: How do climate and sustainability issues affect our fisheries?