Egypt: Alarming gas output decline highlighted By Zohr slump

Newsletter

19 Apr 2023

Egypt: Alarming gas output decline highlighted By Zohr slump. Gas output from Eni’s giant Zohr gas field dropped 11% y-o-y to 2.5 bn cfd in 2022. The diminished output from the Italian firm’s flagship field, which is 6% below the output cap set on the field in 2021 and 23% short of the field’s total production capacity, comes on the back of water breakthrough difficulties. This drove down Egypt’s overall gas output, which has continued to fall in 2023, and which will impact volumes available to be exported as LNG. (Mees)

Higher key rates could merely cool down inflation: CBE Governor.
Higher interest rates in Egypt could have a slight impact in containing inflation that is mainly driven by supply issues, Governor of the Central Bank of Egypt (CBE) Hassan Abdalla said. “We will not hesitate to do more but we need to be very careful,” Abdalla said in rare public comments during the spring meetings of the World Bank and the International Monetary Fund (IMF) in Washington, pointing out that “interest rate is not the only tool.” (Bloomberg)
"A lot of our inflation is imported and a lot of it is due to supply problems," Abdallah said.
“Not only supply prices but supply issues including a backlog that has resulted from some previous regulations. And this in itself is not and will not be addressed by interest rates.” He also confirmed that the CBE would not hesitate to embrace monetary policy to reach its inflation target. Furthermore, he added that Egypt is working on boosting transmission mechanisms to enable the central bank of having “more effective interest rates”. On March 30th, the CBE’s Monetary Policy Committee (MPC) raised interest rates by 200 basis points (bps), marking the first-rate hike in 2023. (Bloomberg)
IMF awaits more reforms in Egypt before 1st loan program review.
The International Monetary Fund (IMF) is waiting for Egypt to implement more of the “wide-ranging reforms” it vowed prior to conducting the first review of the 3 billion USD bailout program. The Washington-based fund encourages more privatization deals for state assets and further flexibility in the Egyptian pound to ensure a successful review. (Bloomberg)
In addition, the IMF’s director for the Middle East, North Africa and Central Asia, Jihad Azour said that the flexibility of the exchange rate is the best way for Egypt to protect its economy from external shocks,”.
The government needs to “redesign the role of the state to focus on priority sectors and allow through leveling the playing field, the capacity for the Egyptian private sector to create growth and create more foreign currencies,” he added. Authorities in Egypt are “moving in the right direction but they never move fast enough when it comes to reforms,” he added. (Bloomberg)
The IMF’s executive board should discuss the first review by June, but in the case of a longer delay the lender may combine it with the next one, which is scheduled for September.
Egypt committed to reduce the state’s involvement in the economy and maintain a permanent currency float as part of the terms of the loan. The government is yet to sell down any assets since it in February announced plans to offload stakes in 32 companies, while the official USD-EGP rate has remained unchanged at 30.94 for almost six weeks. Egypt needs to pass the first review to unlock the second 354 million USD tranche of the loan. (Bloomberg)
President Abdel Fattah El Sisi has issued a presidential decree to set up the Supreme Investment Council.
Set up to replace the investment council that was established in 2016, the new body is part of the state’s efforts to boost investment and stimulate economic growth. Its formation was greenlit by cabinet in November. The new council seeks to eliminate obstacles to new investment and accelerate licensing for new projects. (Hapi Journal)
The Sudanese army and Rapid Support Forces (RSF) have agreed to a 24-hour ceasefire as of this evening, Army General Shams El Din Kabashy said.
The ceasefire comes after US Secretary of State Anthony Blinken urged calm and several countries in the region, including Egypt, worked to mediate between the two sides. Meanwhile, EgyptAir flights to Khartoum remain suspended. The national carrier has informed its customers that the suspension will be effective until further notice due to security instability. (Al Arabiya)
Egypt and Turkey will soon reappoint ambassadors and formally reestablish diplomatic ties following a decade of hostilities,
Turkish Foreign Minister Mevlut Cavusoglu stated at a presser in Ankara Thursday with his Egyptian counterpart Sameh Shoukry. Following their third round of talks in as many months, the two diplomats agreed to collaborate on developing and strengthening a unified military force in Libya, as well as developing a timeline for holding elections in the country, easing a key source of tensions between them. (Reuters & Bloomberg)
French smartphone maker Ace has started producing phones at Sico Egypt’s factory in Assiut.
The company is making an initial 150-200 million EGP investment in its operations. The company launched three smartphones and four feature phones and plans to produce tablets in the second half of this year. Ace plans to export some of its phones to countries in West Africa in addition to selling it here in Egypt. It is worth mentioning that the local phone assembly industry is picking up steam in Egypt. Samsung and Nokia manufacturer HMD Global are among the firms assembling models here, and they should soon be joined by Chinese manufacturers Xiaomi, Oppo, and Vivo. (Al Mal)
Egypt-headquartered logistics startup Trella is putting its operations in Pakistan on pause three years after entering the country.
The company stopped taking on new business in March, the people said, making Trella the latest firm to exit the crisis-hit country. Import restrictions, FX shortages, and a rise in fuel prices have tipped Pakistan’s economy into crisis. Trella will keep some of its staff on the payroll to support operations in Egypt, Saudi Arabia and the UAE (Bloomberg)