Egypt, Saudi Arabia mull possibility of using local currencies for joint trade
Egypt, Saudi Arabia mull possibility of using local currencies for joint trade. Egypt and Saudi Arabia are mulling over the possibility of using their local currencies as part of trade exchange in the near future. The Saudi Minister of Commerce has already submitted a proposal to discuss the possibility of paying a part of the trade exchange operations in local currencies. The proposal will be subject to discussions between the central banks of the two countries, and a final consensus is expected to be reached in 2024. (Asharq Business)
- In addition, Saudi investments in Egypt hit 6.3 billion USD in 7,444 projects in the industrial, construction, tourism, services, agriculture, finance, communications, and information technology sectors.
Egyptian investments in Saudi Arabia total 1.6 billion USD in 2,027 projects in the manufacturing, wholesale and retail trade, and construction sectors. Trade exchange between the two countries in 2022 hit 5.665 billion USD, compared to about 4.572 USD billion in 2021, achieving an annual growth rate of 23.9%. (Hapi Journal)
- Moreover, it is worth mentioning that Saudi Arabian private sector’s investments in Egyptian markets hit 35 billion USD.
The Saudi Arabian private sector’s investments in Egypt amount to 35 billion USD, Chairman of the Saudi-Egyptian Business Council Badr Al-Amiri. He added that the volume of trade exchange with Egypt exceeded 60 billion SAR (492.32 billion EGP) during 2023. Egypt and Saudi Arabia agreed to hold a Saudi-Egyptian forum in the near future to market investment opportunities in the two countries. (Asharq Business)
- EU intends to pump further investment into Egypt via EIB.
The European Union (EU) is seeking to pump more investments into Egypt via the European Investment Bank (EIB) to expand its business in the country, Head of the EU Delegation to Egypt Christian Berger announced. Also, Berger highlighted that Egypt is close to obtaining more support in partnership with the EIB to enhance the sectors of energy, transport, water, and food. (Hapi Journal)
- In consequence, EIB launches regional office for NENA in Egypt.
The European Investment Bank (EIB) has launched its regional office for the Near East and North Africa (NENA) in Egypt. This move aims to support development in Egypt and attract sustainable investments that back transformation in the country, Vigliotti highlighted. Moreover, she said that the bank has invested about 15 billion EUR since the beginning of its partnership with Egypt. The EIB is in charge of the green transport axis within the Nexus of Water, Food and Energy (NWFE) program, noting that 125 billion USD were allocated as investments to support this sector in Europe, Africa, and Asia. (Hapi Journal)
- Fitch Solutions expects Egypt’s GDP to hit 4.2% in FY2023/24.
Fitch Solutions expects an uptick in Egypt’s real gross domestic report (GDP) to reach 4.2% during the current financial year (FY) 2023/2024, compared to 3.8% in the elapsed FY 2022/2023. The figure will be achieved primarily through foreign investment, making up for declining exports and domestic demand, as well as the limited capacity to further reduce imports. These factors will cause the currency account deficit to widen from 1.4% of GDP or $4.7 billion in FY2022/23 to 2.6% of GDP or 800 million USD in FY2023/24, pushing remittance inflows down. (Arab Finance)
- Fitch Solutions added that the Egyptian pound is expected to stay steady at roughly EGP 31 against US Dollar until early 2024, before weakening to between EGP 40 and EGP 45 to USD by the end of the first quarter (Q1) of 2024.
It also expects the Central Bank of Egypt (CBE) to keep policy rates on hold until the end of this year, and to raise rates by 300 basis points (bps) during in first half (H1) of 2024. Moreover, Fitch Solutions anticipates that the fiscal deficit will increase to 7.4% of GDP in FY 2023/2024 from 6.2% of GDP in FY 2022/2023 as a result of higher interest payments, which are a reflection of the rise in government debt yields and increased social spending, keeping the debt near 100% of GDP. Earlier this month, Fitch Ratings downgraded Egypt’s long-term foreign-currency issuer default rating (IDR) to ‘B-’ from ‘B’, with a stable outlook. (Arab Finance)
- CBE to license fintech firms for InstaPay use in 2024.
The Central Bank of Egypt (CBE) is planning to provide a license to fintech companies that allow them to link their issued e-payment cards with InstaPay in 2024. The license could be issued by the CBE for free. On November 19th, Deputy Governor of the Central Bank of Egypt (CBE) Ehab Nasr revealed that the number of InstaPay users increased by 71% to 6.5 million customers this November from 3.8 million customers at the end of last June. (Asharq Business)
- Eastern Company’s new Emirati shareholder will throw the company a 150 million USD lifeline next year even as it finishes its payout to the Chemical Industries Holding Company (CIHC).
Global Investment Holding (GIH) will provide Eastern with some 150 million USD in hard currency next year to bolster the cigarette maker’s ability to source manufacturing inputs. Eastern’s imports of raw materials have been hit by the FX crunch. GIH reportedly sees the facility as a key measure to ensure the profitability of its new investment. Eastern’s net income dropped 20% y-o-y in 1Q FY2023 to 1.1 billion EGP, while revenues fell 32.5% y-o-y to 3.1 billion EGP in the same period. (Al Borsa News)
- CIHC will be paid additional installments equivalent to 94.8 million USD next year.
That will bring the total value of the transaction announced last Thursday to 625 million USD, as agreed in September. The transaction makes GIH the largest holder of Eastern shares. The government looks set to use the bulk of the proceeds from Thursday’s sale to invest in fresh capacity at existing state-owned fertilizer plants, our source said, with an eye to ramping up exports. It will use the rest of the cash to help narrow the budget deficit. (Al Borsa News)
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