Egypt’s annual headline inflation rate increased to 15.3% in May 2022, compared to 4.9 % in the same month of 2021
First, Egypt’s annual headline inflation rate increased to 15.3% in May 2022, compared to 4.9 % in the same month of 2021. The accelerated inflation attributed to the year-on-year (YoY) growth in prices of the food and beverage segment by 27.9%, the alcoholic drinks and tobacco segment by 5.2%, and the ready-made clothing and footwear segment by 7.9%. Moreover, the prices of the transport segment rose by 6.3% last May, while the prices of housing, water, electricity, gas, and fuel segment increased by 8.5%. The prices of the healthcare segment also increased in May by 5.1% YoY, while the restaurants and hotels segment and the commodities and various services segment went up 17.2% and 8.3%, respectively. Additionally, the prices of the communication segment inched up by 0.7% YoY last month. Meanwhile, the growth in prices of the education segment remained unchanged at 13.9%. (CAPMAS)
- Second, oils and grains raise inflation in Egypt to 13.5% in May. Inflation in the Egyptian cities, under pressure from the rise in the prices of oils, grains and vegetables, to record 13.5% in May on an annual basis, compared to 13.1% in April.
We believe the numbers were contrary to expectations. We expected a decline of up to 12.8% due to the base year and some decline in vegetable prices. Oil prices jumped 45.9% year-on-year in May, cereals and bread 41.7%, vegetables 33.5%, and fish 29.9%. The Ministry of Trade and Industry in Egypt renewed the suspension of the export of 6 basic food commodities, for an additional three month, while allowing the export of quantities surplus to the needs of the local market after approval from the ministry. (Bloomberg Asharq)
- Exports of any “excess” supplies of the listed goods could go ahead following Trade Ministry approval, according to the decision.
This comes as the Agriculture Ministry wants local wheat production to account for 65% of our annual consumption needs by 2025, Agriculture Minister El Sayed El Quseir Through these amendments, the government seeks to encourage the national industries, maximize local productivity, and localize advanced industries, which will pave the way for attracting further investments. As per the amendments, the import tariff has been cut for more than 150 items and production inputs, which will help achieve a balance between the imposed tax on the fully-finished goods, intermediate goods, and raw materials. (Bloomberg Asharq)
- More inflation coming our way, Households electricity bills could rise by as much as 21% from 1 July, according to the government’s 2020 schedule to phase out subsidies by 2025.
According to the schedule, hikes in some unsubsidized consumption tiers will see other households pay as much as 6% more. The government will continue to gradually withdraw subsidies over the next three years, according to a new timetable mapped out by the Electricity Ministry in 2019. (Al Mal)
- Moreover, Egypt has settled debts of around 24 billion USD since the beginning of 2022, including 10 billion USD as external debts in external debts and 14 billion USD for foreign funds.
The amounts were paid off to settle loans and sue Eurobonds, which shows Egypt’s commitment to settle all dues in time. On June 6th, the CBE announced that its net international reserves (NIR) declined by 4.38% month-on-month (MoM) at the end of May to 35.495 billion USD due to the 2 billion USD external debt repayments carried out in May. The external debt repayments included the payment of Egyptian Eurobond coupons issued by the Ministry of Finance, along with principal and interest payments to the International Monetary Fund (IMF). (Middle East News Agency (MENA))
- Egyptian President Abdel Fattah El-Sisi has issued the presidential decree No. 12 of 2022 ratifying the SEK 5 million grant from the Swedish International Development Cooperation Agency (SIDA).
The grant will be used to support the field of urban transport and buses rapid transit (BRT) system in Egypt as per the previously signed agreements with SIDA. The cooperation agreements were signed between the Ministry of International Cooperation and SIDA on August 30th 2021 and September 15th 2021 for collaboration. In another context, El-Sisi has issued the presidential decree No. 211 of 2022 on cancelling the decree No.92 of 2010 concerning the establishment of El-Alamein Private University. (Arab Finance)
- And for our EGX and companies talks, Saudi Arabian Savola Group has signed an agreement with the Egyptian Belgium for Industrial Investment (EgyBelg) to purchase assets worth EGP 630 million in the latter.
The signed agreement is part of Savola Group’s expansion plan in the Egyptian market. The Saudi company aims to enter new food industries that could be added to the various products it offers in Egypt in over 30 years. Savola Group seeks to extend its footprint in Egypt, particularly in the snacks market, and to launch new products while maintaining high quality, the group’s CEO Sameh Hassan said. The company also plans to invest 730 million EGP to boost production capacity and bolster the efficiency of distribution infrastructure to ensure product differentiation and geographic expansion across the North African country. For his part, Chief Strategy Officer Mohamed Badran said that Savola’s investment in the Egyptian market has exceeded 5.5 billion EGP. (Arab Finance)
- Ghazl El-Mahalla FC is set to launch an initial public offering (IPO) of 98 million shares at a value of 1.02 EGP per share on the Egyptian Exchange (EGX).
The IPO will be open for subscriptions from June 12th until July 1st, with the possibility of extending the subscription period till the following working day in case the last day of subscription was an official holiday. Ghazl El-Mahalla has employees of over 16,500 and is situated in El Mehalla El Kubra, North Cairo. It produces and exports a variety of woven textile products made from pure Egyptian cotton. (EGX)
- The Egyptian Modern Education Systems (MOED) is studying building a new university in one of the new cities, in alignment with upgrading the company’s stock to the main market.
A full feasibility study is currently under development including all phases of the project, and the company is searching for a plot of land suitable for the purposes thereof. MOED said that it will resume the construction works of the International Education Building which were halted by the Covid-19 pandemic. The building is expected to be operational as of the beginning of the academic year in 2023. It is worth noting that MOED reported a 72.67% year-on-year (YoY) increase in net profits after tax during the first nine months of the fiscal year (FY) 2021/2022, recording 5.32 million EGP. (EGX)
- The board of directors of Cairo for Investment and Real Estate Development (CIRA) has approved a money transfer to Financial Group for Securitization for the launch of a three-year term securitization program at a total value of 2 billion EGP.
The long-term securitized bonds are non-convertible and have a nominal value of 100 EGP per bond. The board invited the extraordinary general meeting (EGM) to discuss the program’s details including offering 800 million EGP bonds in the first issuance. It is worth mentioning that Financial Group for Securitization is a subsidiary of EFG Hermes Holding (HRHO). (Arab Finance)
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