Egypt lifted its forecast for the budget deficit in the current fiscal year 2021-2022 to 6.9% from a previous forecast of 6.7%

Newsletter

20 Jan 2022

For our top talks today, Egypt lifted its forecast for the budget deficit in the current fiscal year 2021-2022 to 6.9% from a previous forecast of 6.7%, and a cabinet statement stated that an initial surplus of 3.2 billion EGP was achieved in the first six months of the current fiscal year until the end of December. And here we need to highlight that we believe that the total deficit in Egypt will approach 7.6% in 2021-2022 due to higher interest payments. The statement did not go into details on the percentage of the total deficit in the first half. Noting that the budget deficit in 2020-2021 amounted to 7.4%. In the current budget, Egypt aims to reach 990.133 billion EGP in domestic finance, compared to 832.293 billion EGP in 2020-2021, and external finances will reach 78.375 billion EGP, down from 165.440 billion EGP in 2020-2021. (Al-Mal)

Foreign investors have injected 970 million USD since early January in investments in Egypt’s long-term treasury bills (T-bills).
These investments in Egypt’s debt instruments reflect the robust rebound of foreign investments in the Egyptian market in 2022. Egypt’s economy has proven its ability to overcome the global monetary policy repercussions, which is positive aspect. In July 2021, the International Monetary Fund (IMF) expected the foreign direct investment (FDI) inflows to jump in Egypt by 60% over the coming four years –starting from current FY 2021/2022. Accordingly, FDI inflows to Egypt are projected to hit 8.6 billion USD during current FY 2021/2022, which ends in June, up from 5.4 billion USD recorded in FY 2020/2021, according to the IMF. The IMF also predicted FDI inflows to Egypt to continue its upturn in FY 2022/2023 to post 11.7 billion USD before hitting 16.5 billion USD in FY 2024/2025. (Arab Finance)
Egypt Exports Commodities increased by 26% in 2021 to reach 32.128 billion USD, compared to 25.427 billion USD a year ago, according to Nevin Jameh, Minister of Trade and Industry.
Gamea attributed the "unprecedented positive indicators achieved by Egyptian commodity exports last year to the increase in global demand for Egyptian products in various productive sectors." Egypt's exports to the European Union jumped 56% in 2021 to 9.153 billion USD in 2021, compared to 5.881 billion USD a year ago, while Egyptian exports to America increased by 51% to 2.446 billion USD. On the other hand, we need to mention that the main reason for this increase is the exit of the main competitor, which is China. Because some of its factories stopped, and their freight rates doubled; which made Egyptian commodities a priority for many global markets, and therefore; The increase in 2021 was next to the export support program. (Bloomberg Asharq)
In addition, the Egyptian government has allocated a total of 3.37 billion EGP during the new fiscal year (FY) 2021/2022, for the Environmental Improvement Program, which comes as one of the five main programs for local development.
The environmental improvement comes as one of the five sub-programs of the local development program, which includes roads and bridges, extension and strengthening of electricity networks, improvement of the environment, security, firefighting and traffic, in addition to a program to support the needs of local units. (Arab Finance)
Also, Egypt plans to increase the electrical output to the North Coast by 50% as part of its plan to provide electrical nutrition for national projects and raise the capacities exported to Libya,
Minister of Electricity and Renewable Energy Mohamed Shaker announced. Shaker added that the total load for the North Coast region is 1,185 MW. Projects with a capacity of 1,015 MW have been contracted, and 170 MW are expected to be added to raise the capacities exported to Libya. He further noted that the estimated cost required to consolidate the North Coast region and increase the capacity exported to Libya amounts to 4.3 billion EGP. (Al-Mal)
Moving to our top talks abroad, there is a little doubt that advanced countries in the first half of 2022 will pull back, even though partially, on the ultra-stimulative monetary policies they have pursued for several years.
What is more consequential, yet less certain, is when and how this will lead to a meaningful tightening of financial conditions and what the spillover effects will be for the global economy. These issues are of interest not only to policy makers around the world but to businesses, households and investors as well. Already, expectations have changed drastically for U.S. monetary policy. Less than two months after Federal Reserve Chair Jerome Powell “retired” the “transitory” characterization of inflation, consensus for this year has shifted to include the end of large-scale asset purchases, at least three interest rate increases starting in March and the initiation of shrinking the central bank’s balance sheet. (Bloomberg)
Inflation in Britain rose faster than expected to a near 30-year high in December, intensifying a squeeze on living standards and putting pressure on the Bank of England to raise interest rates again.
The annual rate of consumer price inflation increased to 5.4% from November's 5.1%, the highest since March 1992, the Office for National Statistics said. Economists polled by Reuters had expected a rise to 5.2%. Financial markets now price in a more than 90% chance that the BoE will raise its main interest rate to 0.5% on Feb. 3. Last month it became the world's first major central bank to tighten policy since the start of the COVID-19 pandemic. (Reuters)
The Central Bank of the United Arab Emirates and the Central Bank of the Republic of Turkey signed a currency swap agreement between the UAE dirham and the Turkish lira.
The agreement, which has a nominal size of 18 billion AED and 64 billion TRY, seeks to enhance bilateral trade and financial cooperation between the two countries, provided that it is valid for three years, with the possibility of extending it through a joint agreement. (Bloomberg Asharq)
Going to our investments talks, first, Egypt for fertilizer production "MOPCO" is seeking to establish a melamine factory in the Damietta Free Zone at a total cost of 260 million USD.
The company’s liquidity is about 3.451 billion EGP, as at the end of September 2021, according to the latest financial figures available on the company, while its total debts are about 1.257 billion EGP, according to the company’s financial position list last September as well. Melamine is used to make thermoplastic plastics, to make dinnerware and kitchen utensils, and to make decorative laminates. The company's share closed yesterday, Tuesday, at the EGX at 92 EGP, up 1.34%. (Bloomberg Asharq & EGX)
Second, the construction of the El Dabaa nuclear power plant (NPP) in Egypt is expected to begin in July 2022, TASS cited Director General of Russia’s state-run nuclear corporation Rosatom Alexey Likhachev.
In early January, Rosatom handed over documents for El Dabaa Units 3 and 4 to the ENRRA. According to the state corporation, the package of documents was submitted ahead of schedule, and, as soon as the permission is obtained, the sides can begin full-scale construction. The El Dabaa nuclear power plant will be the first nuclear power plant in Egypt. It will be built in El-Dabaa city in the Governorate of Matrouh on the coastlines of the Mediterranean Sea. (Arab Finance)
Turing to our EGX and companies talks, Beltone Consumer Finance (Belcash), the consumer finance arm of Beltone Financial Holding (BTFH), is planning to sign 200 new agreements in 2022, according to the CEO of Belcash Moemen Salem.
These agreements include 10 to be signed in the sectors of education, solar power, and real estate development during the first quarter (Q1) of 2022, Moemen said. The company is also mulling over to double the loan lending limit for its clients in the sectors of real estate development and education, he pointed out. Moreover, the company is considering boosting its financing portfolio by eight times, according to the CEO. Belcash is also targeting to increase the number of retailers it deals with to 350 this year, as compared to 150 retailers in 2021, he pointed out. (Al-Mal)
Orascom Development Egypt (ODE) (ORHD) revealed it has achieved a net real estate sale of 9.2 billion EGP at the end of 2021, with a growth rate of 48.8% year-on-year (YoY).
In the fourth quarter (Q4) of 2021, the company’s sales recorded 3 billion EGP. The company attributed the increase in sales to higher demand on the units located in El Gouna, as well as in O West and Makadi Heights. Higher sales were also driven by the increase in the average price per square meter across all the projects. (Al Borsa Newspaper)
Reliance Logistics has acquired an undisclosed stake in investment firm Catalyst Partners.
The acquisition falls in line with the company’s plan to expand into financing, digital transformation and entrepreneurship. The company did not give further details regarding the value or mechanism of the transaction. Catalyst Partners’ board will undergo changes to reflect the new ownership structure. (Arab Finance)
And finally, a majority of shareholders in Vodacom approved the acquisition of the 55% stake in Vodafone Egypt during a general meeting, Vodacom announced in a statement.
Vodacom still needs the approval of the Egypt’s National Telecom Regulatory Authority before the shares can be transferred — and the Financial Regulatory Authority here will need to give it an exemption from the legal requirement to make a mandatory tender offer for the Vodafone Egypt shares it is not buying. The company also needs to jump through regulatory hoops in South Africa, including approval from the Financial Surveillance Department of the South African Reserve Bank and listing on the Johannesburg Stock Exchange of the new shares it is issuing Vodafone Plc. Vodafone Group expects the transaction to close before March 31st. (Mubasher)