Egypt does not need additional external financing at the moment
- For our Wednesday macro talks, according to the IMF mission chief Celine Allard, Egypt does not need additional external financing at the moment thanks to structural policy and fiscal reforms that have course-corrected the economy. Egypt responded to the COVID-19 crisis with timely and prudent fiscal and monetary easing, which helped mitigate the health and social impact while safeguarding economic stability, debt sustainability, and investor confidence. With remaining risks to the outlook stemming from global uncertainty and Egypt’s high public debt and gross financing needs, near-term fiscal and monetary policies should continue to support the recovery while continuing to preserve macroeconomic stability.
- Moreover, to our macro talks, Egypt has agreed to formally join the Customs Agreement for the International Transport of Goods, known as (TIR Convention), which contributes to turning the country into a global logistics. It is worthy to mention that the establishment and activation of the recently established Land Transport Regulatory Authority is one of the promising investment opportunities through which it can achieve integration with Egypt’s plans to expand in Africa and the Middle East. We believe that Egypt can be exploited as a transit area for various goods worldwide, in addition to the possibility of activating fast sea lanes projects with many countries, especially the European Union countries, which were demanding Egypt’s entry into this project.
- Equally important, Egypt’s National Wages Council (NWC) issued a decision setting the minimum wage for private sector workers starting from the beginning of 2022. From January 1st, 2022, companies will need to pay workers at least EGP 2,400 per month instead of EGP 2,000 per month. Currently around 5.6 million works in Egypt’s public sector, this policy could help raise the standard of living and improve the aggregate economy.
- By the same token, the Egyptian Parliament finally approved the long-awaited Sovereign Sukuk Act, paving the way for the government’s inaugural Sukuk sale, Youm7 reported on June 28th. It will allow the government to sell ijara, mudaraba, istisnaa, murabaha, and wakala Sukuk in local and international debt markets. It will also set a term limit of 30 years on all sovereign Sukuk and establish the Sovereign Sukuk Company, a joint-stock company to execute and manage sales.
- For today’s investments talks, Orascom Construction PLC announces that it has signed a contract to build two textile manufacturing complexes in Damietta and El-Mahalla, Egypt. The projects have a total contract value of EGP 2.6 bn and the client is the Holding Company for Cotton, Spinning, Weaving, and Garments. It is worth noting that these projects will play a central role in the revival of the textile industry in Egypt. The manufacturing complexes will utilize state-of-the-art equipment across the seven different facilities. The selection of Orascom Construction highlights the importance of delivering such important projects on a critical schedule.
- In other news, Misr Capital, the investment arm of Banque Misr, plans to launch new investment funds during the coming period in the local market, with its intention to establish other funds abroad, with target sizes of up to 250 million pounds for the fund. The company intends to establish about 4-5 new investment funds in the local market, including stock, fixed income, and cash fund pointing out that the target sizes of the new funds range between EGP 100-250 mn.
- In addition, Ora Real Estate Development plans to launch the first phase of its new project, Silversands, in the North Coast, within the next few weeks, which includes several chalets and villas. The investments of the Silver Sanders project are scheduled to reach about EGP 25 bn, and it will include various units.
- Finally, for our political diplomacy talks, President Abdel Fattah El Sisi held his first phone call with new Israeli PM Naftali Bennett yesterday, emphasizing the importance of preserving the recent ceasefire between Hamas and Israel. Egypt, which played a key role in ending last month’s conflict, supports the resumption of peace talks between Israel and the Palestinians.
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