Egypt’s economy will grow at a 4.5% in FY 2023-2024

Newsletter

30 Apr 2023

Egypt’s economy will grow at a 4.5% in FY 2023-2024, with growth expected to come in at 4.0% in the current fiscal year, according to a Reuters survey. The survey sees growth picking up again in FY 2024-2025 to 5.0%. The Madbouly government’s most recent estimates pencil in growth for the current fiscal year at 4.0-5.0%. The Egyptian economy is currently in the midst of some turbulence, with a very uncertain outlook, with inflationary pressure, a drop in household purchasing power and a slowdown in major infrastructure programs dragging down growth. (Reuters & Hapi Journal)

The Madbouly government will offer 10 billion EGP worth of loans at a subsidized 11% interest rate to tourism players,
pushing the total value of its subsidized loan program to 160 billion EGP. The importance of the tourism sector has only grown over the past year as the country suffers from a protracted shortage of FX on the back of the war in Ukraine. The Tourism Ministry wants to attract as many as 30 million tourists per year by 2028, and the mix of arrivals has tilted since April 2022 from lower-value Russian and Ukrainian all-inclusive Red Sea package tours to higher value European, North American, and Asian visitors. (Hapi Journal)
It is worth remembering that the tourism sector has gotten financing support earlier before.
The Tourism players had access to loans with a tenor of two years and a six-month grace period at an interest rate of 8% as part of Central Bank of Egypt’s (CBE) subsidized program for the industry, agriculture, tourism, and construction sectors. The CBE scrapped the program in November and passed the responsibility on to government ministries as part of the IMF’s conditions for our 3 billion USD bailout package. (Hapi Journal)
In addition, Egypt's hotel occupancy grows 25% in Q1 2023.
Hotel occupancy in Egypt increased by about 20%-25% during the first quarter (Q1) of 2023, compared to the same period last year, supported by the diversity of expatriate markets to the country and the depreciation of the Egyptian pound. Sharm El-Sheikh’s hotels occupancy hit 55%, 65% in Hurghada, Marsa Alam 70%, 80% in Luxor and Aswan, and 85% in Cairo. On March 27th, Minister of Tourism and Antiquities Ahmed Issa unveiled a new package of facilities related to issuing tourist visas. (Asharq Business)
The loan program targets key sectors that bring in FX.
The Finance Ministry has said the subsidized loan program in part aims to help increase exports by providing businesses with the liquidity they need to up production. That could help narrow the country’s external financing imbalance and supply much-needed hard currency amid an ongoing shortage that has helped fuel inflation. (Hapi Journal & Al Mal)
The Development Partners International (DPI) will invest 165 million USD in supermarket chain Kazyon.
DPI has held a “significant minority stake” in Kazyon since last year when it invested 75 million USD in the company. The transaction will see the investors acquire a “significant minority stake” in the firm. This is DPI’s second acquisition in Egypt this month. The firm acquired a minority stake in local pharma player Marcyrl alongside Amethis earlier this month, and has been on the lookout for further opportunities in defensive sectors in the country. (Al Mal)
The European Bank for Reconstruction and Development (EBRD) is on 31 May scheduled to sign off on a 100 million USD facility to state-owned Banque Misr for on-lending to local MSMEs.
“The loan offers a combination of longer-term financing than what is available in the market and promotes financing for MSMEs in Egypt,” the EBRD said. If approved, this would mark the second EBRD on-lending loan Banque Misr has received in as many years, after last year receiving 100 million USD to finance local SMEs working on green projects. (EBRD Website)
Moreover, Banque Misr to establish new e-payment firm within 3 months.
Banque Misr, the country's second-largest government lender, intends to establish an e-payment firm within the next three months. Banque Misr owns a 10% stake in Fawry, the largest electronic payment company in Egypt in terms of volume, number of operations and number of points of sale (POS). (Asharq Busines)
The Madbouly government is in talks with unnamed private Egyptian and Indian pharma companies to establish an 80 million USD pharma raw materials plant,
Public Enterprises Minister Mahmoud Esmat said. The project will work to meet local demand and boost exports. It is worth noting that state-owned pharma manufacturer HoldiPharma plans to build five new factories at a cost around EGP 2.5 bn in partnership with private-sector firms, including an unnamed Indian manufacturer that will act as technical expert. (Asharq Business)
Russia could start closing its agreement allowing the safe export of Ukrainian grain through the Black Sea as soon as next week.
Moscow has signaled that it will not look to extend the agreement brokered by the UN and Turkey last year, saying its own demands to facilitate Russian exports under the pact have not been met. The loss of Ukrainian grain to global markets could push up prices, potentially impacting the imports bill for Egypt, the world’s largest importer of wheat, as it continues to face an external financing gap problem. (Reuters)
Saudi ACWA Power’s Egypt solar project secures 123 million financing.
Saudi Arabian integrated utility developer ACWA Power, partly owned by the Public Investment Fund (PIF), has signed a 123 million USD financing package to develop the 200MW Kom Ombo solar project in Egypt. The package comprises loans of up to 36 million USD from the EBRD, 14.6 million USD from the OPEC Fund, 14.4 million USD from the AfDB, 34.5 million USD from the GCF, 14.8 million USD from Arab Bank and 10 million USD from the SEFA under the COVID-19 IPP relief program. (Zawya)