Egypt total deficit increased during the first 5 months of the current fiscal year 2021-2022 to 3.7% as a percentage of GDP

Newsletter

09 Jan 2022

For our top talks today, first, the total deficit in Egypt increased during the first 5 months of the current fiscal year 2021-2022 to 3.7% as a percentage of GDP, compared to 3.2% for the same period last year, under pressure from increased expenditures, especially debt and government support interests. The first half of the fiscal year usually sees a higher gap between income and spending, due to retained expenses and pension payments, which are made during the first months of the year. We believe that the deficit may reach by the end of the current fiscal year to the same figures as last year of 7.4%. (Egypt Ministry of Finance (MoF))

On the other hand, the Egyptian Ministry of Finance aims to achieve growth rates of 5.7% of GDP in the budget of the next fiscal year 2022-2023, a primary surplus of 2% at the medium level, reduce the deficit and reduce the total deficit to 6.1%, reduce the debt-to-GDP ratio to less than 90%, and reduce the ratio of debt service to the total budget expenditures to less than 30%, compared to the target of 31.5% for the current fiscal year.
Finance Minister Dr. Mohamed Maait said that next year’s budget also aims to extend the life of the debt to approach 5 years in the medium term instead of 3.4 years currently, by expanding the issuance of various medium and long-term government bonds, and targeting new instruments such as sukuk and sustainable development bonds. And green bonds, which contribute to expanding the base of investors, and attract additional liquidity to the government stock market, in a way that helps reduce the cost of debt. (MoF)
In addition, the volume of Islamic banking work in Egypt (it amounts to) about 347 billion EGP at the end of June 2020, and the size of that industry is expected to exceed 500 billion EGP by the end of June 2022 which means an increase of about 44 %.
Among the most important Islamic banks in Egypt are "Faisal Islamic Bank", "Al Baraka Bank", and "Abu Dhabi Islamic Bank - Egypt". Deposits in Islamic transactions increased by about 10% at the end of last June to 321.7 billion pounds on an annual basis, which represents 7% of the total volume of bank deposits in the Egyptian market, while the volume of Islamic Sharia-compliant financing increased by 9% at the end of last June to 296 billion EGP. This represents 5.4% of the size of the Egyptian banking market. (Bloomberg Asharq)
Moreover, the Central Bank of Egypt (CBE) announced that the net foreign exchange reserves rose at the end of December 2021 to 40.934 billion USD, compared to 40.909 billion USD at the end of the previous November, an increase of 25 million USD.
The foreign reserve of Egypt consists of a basket of the main international currencies, which are the US dollar, the single European currency the euro, the British pound, the Japanese yen and the Chinese yuan, a percentage of which Egypt’s holdings are distributed on the basis of the exchange rates of those currencies and the extent of their stability in international markets. (CBE)
Paper prices rose by about 5% in the global and local markets during the month of January to continue their previous and successive rises - according to Amr Khader, a member of the Printing Chamber in the Federation of Industries.
The prices of imported paper recorded 25 thousand EGP per ton, an increase of about 5 thousand EGP over the local price. He added that the increase in the local price this month ranged between 900 and 1,300 pounds per ton, due to the Qena factory raising selling prices. It is worth mentioning that the size of the Egyptian market’s consumption of paper is 500 thousand tons annually, and about 200 thousand tons are produced locally through the companies “Qena” and “Edfu” and several other small companies, while the rest is imported (about 300 thousand tons annually. (Al-Mal)
Egypt will start the establishment of the first 10 stations of the bus rapid transit (BRT), Transport Minister Kamel el-Wazir revealed. These are the Suez – Asher Station – al-Marj – Mostorod – Bahtim – stations, and the intersection of the Ring Road with Cairo-Alexandria Agricultural Road.
He added that the construction of remaining stations is underway. He further noted that six lanes will be dedicated for private cars, and an internal lane will be designated for the BRT buses, bringing the total to seven lanes in each direction, except for the Moneib Bridge, which will have a total of eight lanes in each direction. (Arab Finance)
And for our latest Corona talks, Egypt received an additional 1.5 million Pfizer vaccine doses from the US, in partnership with COVAX, according to a statement by the US Embassy in Egypt. The move comes along with the US continuous commitment to support Egypt through this global health crisis.
These Pfizer doses will be dispatched to Ministry of Health and Population facilities in Cairo and stored in UNICEF-funded ultra-cold storage equipment used exclusively for the Pfizer vaccine. Last week, Egypt has received a total of more than 2.3 million doses of the Pfizer, Moderna, and AstraZeneca coronavirus vaccines. (Mubasher)
Dr. Heba Rushdy, Director of Hoxter Pharmaceutical Industries, said that the company achieved sales of more than 200 million EGP during 2021, compared to 150 million EGP in 2020, with a growth rate of 35%.
She added that the company has large production capabilities through a factory located on an area of more than 22,000 square meters in Badr Industrial City, pointing out that it applies all standard standards according to the quality certificates it obtained. She stated that all the materials required to produce the first oral drug to treat the Corona virus were imported, in preparation for the start of the production process in an experimental manner, under the supervision of the Ministry of Health and the Egyptian Medicine Authority, and then analyzing the drug and ensuring that it conforms to specifications. (Al-Mal)
Moving to our investments talks, South Korea’s Korea Hydro & Nuclear Power (KHNP) could work on the construction of the Rosatom-built Dabaa nuclear plant after reaching an early agreement with the Russian state company.
Russian state nuclear corporation Rosatom has pre-authorised KHNP as the sole bidder for a contract for the procurement of certain equipment and materials, and the construction of the main and auxiliary buildings and structures of the turbine islands of units 1-4 of the El Dabaa in Egypt by AtomStroyExport. This means that KHNP is the single source bidder eligible to negotiate the terms and conditions of the definitive contract for the proposed transaction, subject to its compliance with ASE procurement procedures and the parties agreeing on such terms. (Al-Mal)
Also, Egypt will sign a memorandum of understanding (MoU) with a foreign consultancy to prepare a 12-month strategy to determine accessibility and opportunities in Egypt for green hydrogen production, Minister of Electricity and Renewable Energy Mohamed Shaker announced.
Shaker said that such a strategy would localize hydrogen production and supplementary industries as well as determine local demand, hydrogen prices, and the strategy’s cost. A search for investment opportunities to localise green hydrogen production with a limited capacity ranging from 100 to 200 megawatts would then follow. (Arab Finance)
PASSAP Home Appliances plans to inaugurate its 90 million EGP stove factory by the end of 2022. The expected production capacity of the new plant is estimated at 200,000 gas stoves annually, while it aims to reach its full capacity during the first three years of operation. Additionally, the company plans to acquire 15% of domestic market sales and benefit from the high demand.
Located in the 10th of Ramadan City, the new factory covers an area of 15,000 square meters, which is an extension of the company’s current factory that produces refrigerators, freezers, heaters and coolers. The company eyes to earmark 50% of its output for exports.. (Al Borsa News)
Turing to our EGX and companies talks, the total profits of the Assiut Petroleum Refining Company recorded a big jump during the last fiscal year, and it jumped by nearly 100%, recording 45 million EGP. The company aims to increase its profits and sales, especially after operating its project to produce high-octane gasoline, which was opened last year.
It is worth noting that the Minister of Petroleum and Mineral Resources, Tarek El Molla, witnessed last October the signing of a memorandum of understanding between Assiut Petroleum Refining and the two companies, Enppi and Petrojet, to establish the new project for atmospheric distillation at the Assiut refinery at an investment cost of about 6 billion EGP, and a design capacity of 5 million tons of crude. Annually to contribute to the sustainability of the operation of current and future projects, including a gas recovery unit (butane). (Al-Mal)
The Middle East Oil Refinery Company (MIDOR) targets raising the production capacity of Alexandria refinery by 60%, a statement by the Ministry of Petroleum and Mineral Resources revealed.
With total investments of $2.4 billion, the refinery will produce EURO 5 diesel once modern and modified units enter the operational testing process in mid-2022. According to the statement, full operational testing of all units will be completed by the end of 2022. (Arab Finance)
Misr National Steel (Ataqa) (ATQA) has purchased the tender specifications of the billets melting license with a capacity of 1.1 million tons.
In case of winning the bid, the company would allocate a sum of 3.5 billion EGP to establish a new factory. Ataqa is currently studying all the details mentioned in the specifications, in order to bid for the license at the required time on February 15th, 2022. The company has not determined the financing resources of this project yet. (Arab Finance)
And finally, Banque Misr recently signed a cooperation protocol with OPay Egypt to provide online electronic collection services as a payment facilitator for medium and small businesses in Egypt.
Under this agreement, OPay provides electronic collection services via the Internet in cooperation with the Bank of Egypt for merchants and small and medium-sized companies from the bank’s partners. The company aims to reach the largest number of merchants to provide e-commerce solutions by accepting various types of online collections using all types of bank cards. In addition to the QR Code and the Request to pay (R2P) service, as well as providing installment services for credit card holders from Banque Misr. (Al-Mal)