The big news today is all about yesterday’s fluctuations of the EGP/ USD exchange rate

Newsletter

12 Jan 2023

The big news today is all about yesterday’s fluctuations of the EGP/ USD exchange rate. Yesterday’s interbank auction saw the EGP fall in steady increments from an opening rate of 27.70 to the greenback to 32.20 / USD at around 1 pm CLT. In less than an hour, the EGP rallied back to 31.85, then 31.75, 30.85, 30.05. The EGP closed the day at 29.76 to the greenback, according to the Central Bank of Egypt’s website. That means the EGP had lost as much as 16.4% at its peak before clawing back losses to close down 7.7% for the day. (Hapi Journal)

We’re getting over 5 billion USD before the end of the year from an array of lenders
Egypt is receiving 700 million USD from the IMF over the course of 2023, with two 347 million USD tranches scheduled for March and September. The government will receive 2 billion USD from selling down state-owned assets. The World Bank, the China Development Bank, the Asian Infrastructure Investment Bank, the Arab Monetary Fund, and the African Development Bank will stump up the rest. We will see the remaining 2 billion USD from the IMF across six 347 million USD tranches spanning until September 2026, with two disbursements scheduled for March and September each year. (Al Mal)
Egypt faces a 17 billion USD financing gap over the next four years, with the 3 billion USD IMF program accounting for less than 20% of this
The remainder [is] expected to be filled by other multilateral and bilateral creditors, including the World Bank, the Asian Infrastructure Investment Bank, as well as by the proceeds from sales of state-owned assets, including divestment to Egypt’s regional partners and their sovereign wealth funds. GCC funds are staying put until 2026: In efforts to ensure that our funding gap doesn’t expand any further, the government has secured assurances that the 28 billion USD in GCC deposits at the CBE will not mature before the end of the loan program in September 2026. The money will not be used to purchase equities or debt. (Asharq Business)
Egypt’s annual core inflation records 24.4% in December… As the impact of successive currency devaluations continued to feed through to the economy
The annual core inflation rate of Egypt recorded 24.4% in December 2022, compared to 21.5% in November 2022. This is the 16th month in a row that core inflation has accelerated. The hospitality sector was hit particularly hard, with prices rising 33.2% y-o-y. Clothing and footwear prices were up 16.5% y-o-y while healthcare costs rose 12.3%. Successive currency devaluations, the fallout from the war in Ukraine, and import restrictions all played a part. (Hapi Journal)
Egypt’s petroleum sector excluded from rationalization of USD spending decision
The ministry has started amending the legislative framework and laws regulating the mining sector in Egypt since 2018, the minister added, noting that bids have been launched accordingly to attract new investments. Around 8.5 million tons of liquefied natural gas (LNG) were exported in 2022. The government seeks to increase the volume of export by raising production, gas consumption, and imports from Eastern Mediterranean countries. (Hapi Journal)
El-Sisi directs government to supply wheat to farmers at rewarding price
President Abdel Fattah El-Sisi directed the government to make the supply price of wheat rewarding for farmers in a way that achieve an adequate economic return for them. The President is concerned on the position of the strategic reserve of all basic food commodities of the state, taking into account the current global food crisis, to maintain a solid strategic reserve, as well as to maximize the added value of storing goods from strategic silos that have been established across Egypt. (Al Mal)
Egypt not to impose new taxes on economic activities: Maait
The Egyptian government does not intend to impose new taxes on economic activities, nor undergoes amendments to tax on commercial and industrial profits. In line with the presidential directives, a draft law is currently being prepared to end all the accumulated old taxes, Maait added. The draft law is based upon the development of micro, small, and medium enterprises (MSME) that cover 60% of old cases, and there is another vision for tax treatment of the remaining 40%. (Arab Finance)
Moving to our startups talks, BioNTech to acquire Tunisia’s AI startup InstaDeep in a 680 million USD deal
BioNTech and InstaDeep announced that they have entered into an agreement under which BioNTech will acquire InstaDeep in a 680 million USD deal, a global technology company in the field of artificial intelligence (AI) and machine learning (ML). The transaction includes a total upfront consideration of approximately 438.9 million USD in cash and BioNTech shares to acquire 100% of the remaining InstaDeep shares. In addition, InstaDeep shareholders will be eligible to receive additional performance-based future milestone payments of up to approximately 242 million USD. (WAYA)
InvestSky, a social investing platform for a new generation of retail investors across GCC, raises 3.4 million USD in a pre-seed round
InvestSky was founded in 2021 by Nitish Mittal and Turki Alshaikh, as a social investing commission-free platform with the aim of making investing inclusive, intuitive, and informed. The platform allows users to buy fractional stocks starting from 1 USD and provides a social community for users to collaborate. The startup also received a category 4 license with retail endorsement from Dubai Financial Services Authority (DFSA). (WAYA)
And for the investments part, KarmSolar secures 83 million EGP from HSBC for Farafra Solar Grid.
KarmSolar has secured EGP 83 million in funding from HSBC Bank for the development of Farafra Solar Grid’s Phase 1, with the support of Ezdaher Financial Consultancy. Farafra Solar Grid marks KarmSolar’s second grid-solution after the Marsa Alam Solar Grid, covering 100% of clients’ load. The project will allow for around 60% solar penetration aiming to reach 100% in three years’ time, thereby offsetting a total of around 5,200 tons of CO2 emissions per year. (Arab Finance)
Saudi MA'ADEN eager to invest in Egyptian mining industry
Representatives from the Riyadh-based company will visit Egypt within 10 days to explore the available opportunities for investment in the sector. The mining sector accounts for less than 0.5% of Egypt’s gross domestic product (GDP), the minister said, noting that the government seeks to boost its contribution to 5% by 2030. The petroleum ministry is looking forward to attracting annual investment of 1 billion USD into the sector of gold prospecting. (Al Mal)
Finally let’s talk about companies and EGX, Contact Financial seeks to increase finance portfolio by 70% in 2023
The value of the finance offered by the company in 2022 surged 62% to 11.3 billion EGP, compared to 2021 figures. The company’s expansions outside Egypt would reach the GCC soon, targeting Egyptians living in that region. As for Africa, the top executive reveals that the company would expand in the continent by partnering with Mansour Group in Kenya. Contact is set to sign a partnership agreement with a European car agent in Egypt to provide customers with auto finance services. (Business Asharq)
BTECH has closed a 1.038 billion EGP securitized bond issuance
The three-tranche issuance is the first in a short-term 5 billion EGP program that the company is rolling out over two years. The three tranches were rated P1 by Middle East Rating & Investors Services. The securitization market saw issuances worth a combined 51.2 billion EGP in 2022, more than three times the 15.8 billion EGP sold the year prior. It’s worth remembering that Saudi Arabia sovereign wealth fund PIF last year acquired a 34% stake in the company for an undisclosed amount. (Al Mal)
CIB issues a new savings certificate with a 22.5% return.
The Commercial International Bank-Egypt (CIB) launched a new savings certificate for a period of one and a half years with a fixed return in EGP, at a return rate of 20%, issued monthly, and 22.50% issued upon maturity, with a minimum purchase of 100,000 EGP and multiples of 1,000 EGP. Last week, the National Bank of Egypt (NBE) and Banque Misr issued one-year certificates of deposit at an interest rate of 25%, issued annually, and 22.50% issued monthly. The Egyptian pound surpasses the EGP 30 mark against the US Dollar this morning in Egyptian banks. The current rate to date is 30.4 for the first time in the history of Egypt. (Hapi Journal)