Egypt issues new resolution to rationalize spending amid economic crisis

Newsletter

10 Jan 2023

Egypt issues new resolution to rationalize spending amid economic crisis. The Prime Minister Moustafa Madbouly has issued a directive to all ministries, with the exception of a few “essential” ones, to rationalize internal spending and limit spending on some national projects. Under the new measures, ministries and their relevant authorities will have 21 days to submit reports detailing the portion of the budget they intend to rationalize and freeze until the end of the fiscal year. (Bloomberg Asharq)

The resolution also addressed postponing the implementation of any new projects that have not been started and have a clear dollar component
In addition to postponing spending on any non-urgent needs. It also stipulates the rationalization of all travel activities outside the country except for extreme necessity and after obtaining the approval of the Prime Minister, or if the inviting party bears all the costs of travel. In this regard, the Minister of Finance shall submit a report every two months to Prime Minister on the extent of the commitment of the addressees to implement the provisions of this decree and the results of its implementation. (Bloomberg Asharq)
Ship refloated after running aground in Egypt’s Suez Canal
A cargo vessel that briefly ran aground in the Suez Canal earlier this morning has been refloated. The 225-meter MV Glory, which was sailing to China from Turkey, was refloated by Suez Canal Authority (SCA) tugs. Head of the SCA Osama Rabie reiterates that "the SCA has more than enough capabilities and expertise in the field of maritime salvage operations which enable it to deal with any possible emergencies." (Bloomberg Asharq)
IMF to discuss Egypt's 3 billion USD loan program tomorrow
The IMF will hold a virtual press conference on its 3 billion USD financial assistance program with Egypt tomorrow at 4pm CLT. The program offers a comprehensive policies package to maintain economic stability and restore margins in Egypt. The conference will be attended by Ivanna Vladkova Hollar, the IMF mission chief in Egypt, the Middle East, and Asia. In mid-December 2022, the executive board of the IMF approved a 46-month arrangement worth about 3 billion USD under the Fund Facility Extended (EFF) to Egypt. The IMF also predicted that the EFF would pave the way for additional facility worth approximately 14 billion USD to Egypt from its international and regional partners. (Al Mal)
The newly released 25% certificates of deposit have raked in almost 100 billion EGP in a matter of days
And the two state banks offering them have reportedly secured a major loan to meet local demand for hard currency. Savers invested some 66 billion EGP in CDs at the National Bank of Egypt (NBE) and 39 billion EGP at Banque Misr. The two state-owned banks are the only banks so far offering the CDs. Nearly half of the money poured into the CDs is fresh money, not money taken out of other CDs, noting that many depositors have de-dollarized to buy into the certificates. (Arab Finance)
In addition, it’s worth mentioning here that the high demand for the CDs is a good sign for the EGP moving forward
Noting that these instruments will help curb demand for the greenback and allow the EGP to stabilize at its current rate. The CDs were introduced to convince folks with hard currency deposits in the banking system to de-dollarize and, at the same time, to tamp down inflation by reducing liquidity in the market. (Zilla Capital)
Banque Misr, NBE get 700 million USD loan from international lenders
The two largest state-run banks obtained the loans amid the government’s direction towards fulfilling the demand for dollars and releasing the piled-up goods at ports. Banque Misr got a seven-year 300 million USD loan from the African Development Bank (AfDB) that matures on December 2029. While the NBE received a three-year loan of about $405 million from a banking consortium comprised Doha Bank Qatar, Emirates NBD, First Abu Dhabi Bank (FAB), the UK’s Standard Chartered, and Sumitomo Mitsui Banking Corporation. (Hapi Journal)
The price of chicken and eggs should decline from mid-January after the government worked to release feed stuck at ports that had led to supply constraints and stoked inflation
The government has worked to release 1.75 million tons of livestock feed in the past 2.5 months, Agriculture Ministry official Tarek Soliman said. Noting that Inflation figures for December will be released today expecting it to record high rates and continuing this high trend till the end of Q1 2023. (Shorouk News)
EGX officials are reportedly mulling onboarding the EGX to the Gulf’s Tabadul regional exchange hub
The move would allow Egyptian and Gulf investors direct access to trading on the EGX and regional bourses through authorized brokers. Launched last summer, Tabadul grants investors in the Abu Dhabi Securities Exchange (ADX) and the Bahrain Bourse (BHB) access to both markets through local authorized brokers. Muscat’s stock exchange in October signed an MoU to join the platform and more Gulf exchanges will follow suit. (Shorouk News)
EGX officials are booked for visits to Saudi Arabia and the UAE in the coming months as part of a roadshow geared towards attracting foreign investors to the EGX
The EGX has been working to up foreign inflows, particularly from the Gulf. Saudi sovereign wealth fund PIF and Abu Dhabi’s ADQ together invested 3.1 billion USD in government-owned shares in EGX-listed companies last year. (Bloomberg Asharq)
Abu Dhabi wealth fund Mubadala and Alpha Dhabi Holding, one of the UAE’s biggest companies, have formed a joint venture that will lend some 2.5 billion USD in private credit over the next five years
Mubadala will “leverage its partnership” with private equity giant Apollo to find borrowers for the platform, in which Mubadala will own 80% and Alpha Dhabi 20%. The global market share for private credit funds is increasing as they eat into banks’ market share amid a high interest rate environment. Our friends at Chimera Capital in November entered private credit with the launch of their 2 billion USD global fund with US alternative asset manager Alpha Wave Global. (Zawya)