Egypt has signed contracts to sell stakes in state assets worth a total of $1.9 billion as part of a programme to boost the private sector and raise scarce hard currency, Prime Minister Mostafa Madbouly said on Tuesday, Reuters reported. The contracts include a deal to sell minority stakes in three companies to Abu Dhabi sovereign wealth fund ADQ for $800 million, and a deal to raise $700 million by increasing the capital of a company that owns a group of hotels in Egypt, said Planning Minister Hala el-Said.
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Egypt
Egypt looked past a pick-up in inflation to keep interest rates unchanged for a second month, with the central bank’s next bout of monetary tightening likely hinging on the country’s ability to secure the foreign exchange needed to manage another currency devaluation, Bloomberg News reported. The Monetary Policy Committee on Thursday maintained the deposit rate at 18.25% and the lending rate at 19.25%, in a decision that matched the forecasts of most economists surveyed by Bloomberg.
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Egypt's cabinet has approved a draft law to eliminate tax exemptions for state entities in a bid to attract private investment, a cabinet statement said on Wednesday, but the law appeared to retain at least some privileges enjoyed by the army, Reuters reported. Egypt, in the midst of a severe foreign currency shortage, has been seeking to encourage both foreigners and Egyptians to invest more. Many investors have hesitated out of concern that state-owned enterprises, including those owned by the army, use tax exemptions and other privileges to compete unfairly.
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India is providing Egypt with a credit line of unspecified value, Egyptian Supply Minister Ali El-Mosilhy said, in the latest support from an ally for the North African nation’s troubled economy, Bloomberg News reported. The Middle East’s most populous nation is racing to turn around an economy that was heavily exposed to the shock waves of Russia’s invasion of Ukraine and is a major importer of wheat and other commodities. Egypt has agreed on a $3 billion deal with the International Monetary Fund, while its Gulf Arab allies have pledged billions of dollars in investment.
Egyptian inflation accelerated after a monthlong respite, as a round of price increases by authorities fans pressures already building following three currency devaluations, Bloomberg News reported. Consumer prices in urban parts of Egypt climbed an annual 32.7% in May from 30.6% the previous month, according to a statement Saturday from the state-run statistics agency CAPMAS. Food and beverage costs, the largest single component of the inflation basket, rose 60%.
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Egyptian bonds slumped after S&P Global Ratings took a far more downbeat view of the nation’s finances than the International Monetary Fund, forecasting further currency depreciation and lowering its outlook to negative, Bloomberg News reported. Dollar bonds maturing in 2025 dropped 1.6 cents on Monday while notes maturing in 2032 fell 0.9 cents, pushing their yields to 20.2% and 17.4% respectively, data compiled by Bloomberg showed. As of 4 p.m. in London, Egyptian debt of varying maturities made up nine of the ten worst-performing bonds in emerging markets on the day.
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Egypt’s Central Bank said it raised interest rates on Thursday as the embattled Middle Eastern country continues to battle surging inflation and a depreciating currency, the Associated Press reported. In an online statement, the bank’s monetary policy committee said the most basic lending rate, the overnight deposit rate, has increased from 16.25% to 18.25%. The hike aims to ease spiraling inflation, with the annual figure reaching 32.9% in February, up from 26.5% in January.
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Traders are on a record-long streak of hedging against a decline in the Egyptian pound as some Wall Street banks warn growing pressures on the currency could soon force the central bank’s hand in allowing another devaluation, Bloomberg News reported. Time may be short for a country facing what Citigroup Inc. said is growing pent-up demand for dollars that won’t ease without more currency flexibility and stronger investment flows. Half measures haven’t been enough, stalling deals and resulting in an underperformance of Egypt’s bonds.
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Russia’s invasion of Ukraine, now in its second year, has pushed up food and energy prices worldwide, adding another layer to Egypt’s economic crisis, the Associated Press reported. Soaring inflation, a severely weakened currency and other problems have followed decades of government mismanagement and broader disruptions, starting with the turmoil from the 2011 Arab Spring popular uprising, then years of militant attacks, followed by the coronavirus pandemic and the war in Ukraine.
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