Egypt paid off more foreign debt than ever before in the first nine months of FY 2021-2022
Egypt paid off more foreign debt than ever before in the first nine months of FY 2021-2022. Foreign debt repayments between July and March came to almost 20 billion USD, up from 10.9 billion USD in the same period the year before and an all-time record for the nine-month period. Debt repayments in 3Q alone were more than double 3Q 2020-2021 due to higher principal and rising borrowing costs. External debt is at an all-time high and rose 17% y-o-y to 157.8 billion USD in the January-March quarter. (Economy Plus)
- Egypt’s reserve money (M0) rose 3.66% month-on-month (MoM) in May to reach 1.196 trillion EGP.
Currency in circulation outside the CBE declined to 822.127 billion EGP in May from 846.982 billion EGP in April. Banks' deposits in local currency with the CBE grew to 374.214 billion EGP in May from 307.101 billion EGP a month earlier. Domestic liquidity (M2) increased to 6.500 trillion EGP in May from 6.416 trillion EGP in April, while the Money supply (M1) inched up 1.27% MoM to 1.497 trillion EGP in May. (CBE)
- Foreign holdings of Egyptian treasury bills (T-bills) grew by 4.33% month-on-month (MoM) in June, marking the first monthly growth since last February.
Foreign holdings of Egypt’s T-bills rose to 157.057 billion USD in June from 150.537 billion USD in May. However, foreign investments in the Egyptian debt instruments have not been fully recovered. Compared to figures recorded in June 2021, foreign holdings of Egyptian T-bills dropped by 56.33%. (CBE)
- The Ukrainian government is planning on releasing a detained vessel carrying a 60,000-ton wheat shipment purchased by Egypt.
The Ukrainian prosecutor general requested the detainment of the vessel in July to investigate its Russian owner. The wheat cargo was purchased by Egypt’s General Authority for Supply Commodities (GASC) in February and had not been delivered since then. The vessel was supposed to be released after an agreement between the Russians and the Ukrainians under the auspices of the United Nations for the resumption of Black Sea grain exports. The Ukrainian prosecution is considering allegations against Russian owner. (Reuters)
- The Egyptian government is preparing a draft bill to be presented to the Cabinet soon to amend some provisions of the Universal Health Insurance (UHI) Law
to deduce the mandatory contribution to the UHI from the tax base. The new law will grant the Cabinet the power to exempt some revenue from the mandatory contribution to the UHI to incentivize the economy. Maait called on employees at the Egyptian Tax Authority to study the executive mechanisms that prevent the deduction of the UHI’s contribution more than once per product. (Arab Finance)
- Forget about inflation. Amid the rising commodity prices, some manufacturers are quietly shrinking their package sizes while maintaining prices.
Dubbed as “shrinkflation”, the phenomenon is accelerating globally and the Egyptian market is no exception. shrinkflation is not the only way ahead, as companies can have other options in meeting the ideal price point. There are multiple ways to reduce the costs before shrinking the product, from cutting the packaging costs to reducing shipping fees. Egypt's annual headline inflation recorded 14.6% in July 2022, compared to 6.1% in the same month of 2021. (Zilla Capital)
- It is interest rates week here in Egypt. The Central Bank of Egypt (CBE) is likely to resume its tightening cycle and raise rates for the third time since March when it meets this Thursday in a bid to curb down on inflation and support the EGP.
It is expected that the Monetary Policy Committee (MPC) to raise rates by around 0.75 bps to 100 bps. The overnight deposit rate currently stands at 11.25%, and the lending rate is 12.25%, while the main operation and disc. rates are at 11.75%. The bank’s monetary policy committee (MPC) has hiked rates by 300 bps since March, but chose to leave them unchanged during its latest meeting in June, after inflation in May came in below expectations. (Zilla Capital)
- We believe the MPC hiking rates by 100 bps as a proactive measure to curb inflation, which we expect will continue to rise over the course of the year driven by rising fuel and food prices, as well as the weakening EGP.
Inflation reached a fresh three-year high in July on the back of higher food and fuel prices, with consumer prices in urban areas rising 13.6% y-o-y. External pressures triggered by the war in Ukraine and rising interest rates in developed markets have squeezed foreign-currency liquidity in the banking system and caused the country’s FX reserves to fall 20% since March. (Zilla Capital)
- Elsewedy Electric (SWDY), along with Germany’s Deutsche Bahn International Operation (DB IO), has signed a term sheet with the National Authority for Tunnels (NAT) for the operation and maintenance of high-speed network projects in Egypt.
The high-speed network project will consist of three lines; the 660-kilometer green line to run between Ain Sokhna, El Alamien, Marsa Matrouh; the 1,100-kilometer blue line to link Greater Cairo with Abu Simbel; and the 225-kilometer red line to connect Luxor with Hurghada and Safaga harbor. It is worth noting that DB IO is the world’s leading operator of transport solutions, with operations in 130 countries. (Arab finance)
- Moving to our EGX and companies talks, Saudi Arabia’s competition watchdog has given the greenlight to Saudi Telecom’s internet subsidiary to acquire a controlling stake in Giza Systems.
Shareholders agreed to sell 89.5% of the company to Solutions by STC in April in a transaction that values Giza at USD 145 mn. Inergia Technologies, which is majority owned by Egyptian private equity firm B Investments, agreed to sell its 65.7% stake in the firm. (Al Mal)
- e-Finance will provide financial and digital services to the Saudi sovereign wealth fund’s new Egypt investment arm.
The PIF now owns a chunk of the state-owned fintech player: The Saudi Egyptian Investment Company (SEIC), set up earlier this month by the Public Investment Fund to manage its investments in Egypt, acquired 25% of e-Finance. SEIC agreed to use its services as part of the negotiations for the acquisition, Sarhan told the business newswire. (Al Mal)
- The board of directors of Amer Group Holding (AMER) has approved the proposed horizontal demerger of the company into two companies.
Accordingly, Amer Group Holding will be the demerging company. The demerger will be carried out by the issuance of the same number of the demerging company while amending the nominal value of the stock, and the issuance of the same number of shares for the demerged company with a nominal value that represents the difference between the nominal value of the demerging company before and after the demerger. (EGX)
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