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Submission: On March 14 via manual from JO — Scanned from DE
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GET ENTERPRISE DAILY Available in your choice of English or Arabic Subscribe Egypt Edition Countries Egypt Edition UAE Edition Saudi Edition Industries Climate (MENA) Logistics (MENA) Language English * العربية Subscribe Archive Sections Business Business View all Investment IPO M&A Debt Privatization Macro + Economy Opinion pieces Regulation Regulation View all Authorities Regulation Legislation Taxation Customs State institutions Central Bank of Egypt Egyptian Exchange Financial Regulatory Authority Sovereign Fund of Egypt Courts Government Ittihadiya Cabinet watch Public policy Diplomacy Startups Startups View all Startup watch Founder of the week Companies Companies View all By industry All companies Earnings watch Industries Industries View all Agriculture Automotive Banking Basic materials Capital markets Climate Commodities Construction Development finance E-commerce Education Energy Finance Fintech Food Healthcare Infrastructure Hospitality + Tourism Law Manufacturing Media Microfinance Mining NBFS Outsourcing Private equity Real estate SMEs Sports Tech Telecoms Trade + Logistics Transport Enterprise for your industry Enterprise for your industry View all In Egypt Hardhat What's Next Blackboard Going Green Inside Industry Around the region Enterprise Climate Enterprise Logistics Newsmakers Newsmakers View all My morning routine Coffee with… Founder of the week Moves CEO poll Podcasts Reader poll Analyst of the week Kudos Explainers Explainers View all Enterprise explains Spotlight Macro picture Data Data View all Growth projections Balance of payments Purchasing managers' index Inflation Reserves Suez Canal Tourism ArchivesTalkshowsLifestyle Lifestyle View all The Weekend Enterprise recommends Office life Art & culture TV & entertainment Worth watching Worth reading Your wealth EventsCalendar about About Enterprise Advertise with us Contact us Get advice from us Work with us Privacy&Support Privacy policy Sign in Sunday, 3 March 2024 Read full issue ECONOMY INVESTORS TURN MORE BULLISH ON EGYPT’S ECONOMY AS PROCEEDS FROM RAS EL HEKMA SALE ENTER STATE COFFERS Egypt received USD 10 bn from Ras El Hekma sale over the weekend in addition to USD 520 mn from the historic hotels sale * https://s3.us-east-1.amazonaws.com/ent.news/audio/2024/3/.91a0cc4e-3ff2-406f-bb26-b6c0e8a85273.mp304:42 * * * * New Tab * Copy Link * Facebook * Twitter * Linkedin * WhatsApp * FDI * IMF * devaluation * foreign exchange * Fitch Ratings * Arqaam Capital * economy The USD 35 bn Ras El Hekma sale has led to a strong shift in Egypt’s economic outlook, with once bearish investors and credit rating agencies now changing their forecasts for the economy. The EGP has continued to recover on the parallel market following the announcement that Egypt’s FX reserves have seen a significant boost over the last few days from the first trances of money ADQ that some believe will help support the long-awaited currency devaluation and pave the way for further external financing and economic reforms. HOW MUCH HAS THE GOV’T COLLECTED FROM THE SALE?- On track to receive USD 15 bn within a week of the agreement signing: Egypt receivedUSD 10 bn for the Ras El Hekma agreement over the weekend — a USD 5 bn transaction was made on Tuesday followed by a similar one on Friday — Prime Minister Mostafa Madbouly announced in cabinet statements (here and here). A third tranche of USD 5 bn will be rolled from a previous UAE deposit at the CBE, Madbouly added. Meanwhile, the remaining USD 20 bn from the agreement will be deposited within the next two months — USD 6 bn of which will be from existing UAE deposits at the CBE. Wait, there’s more? The government also received USD 520 mn on Thursday as part of the USD 800 mn sale of seven historic hotels to Talaat Moustafa Group’s Icon Investments after the acquisition of a 51% stake in the hotels was finalized last month. There’s also good news on the NDFs front: The EGP once again strengthened in the market for twelve-month non-deliverable forwards (NDFs) to reach 50 against the USD on Friday, down from the high fifties recorded last week, Asharq Business reported. FITCH RATINGS WEIGHS IN- Fitch sees Egypt’s FX liquidity improving following Ras El Hekma agreement: FitchRatings thinks that the agreement will “significantly improve” Egypt’s external financing position and its FX liquidity, paving the way for an adjustment of its exchange rate with a limited magnitude and a lower risk of currency overshooting. This would, in turn, enable Egypt to access an enhanced support package from the International Monetary Fund. “The scale of the FDI is large relative to Fitch’s expectations when we downgraded Egypt’s rating to ‘B-’, from ‘B’, with a Stable Outlook in November 2023,” the rating agency said on its website. This doesn’t mean we’re off the hook just yet: Fitch sees Egypt’s macroeconomic situationremaining difficult for the next two fiscal years due to high inflation and weak growth levels, despite expecting annual inflation to cool in 2H 2024. The rating agency also sees pressing fiscal challenges to remain, expecting interest costs to exceed 50% of government revenues in FY 2024-25. What else did they say? “The [Ras El Hekma agreement] provides much needed breathingroom for Egypt’s external finances and an opportunity to restore confidence, but the durability of the improvement will depend on the implementation of reforms to prevent renewed imbalances, such as a more flexible exchange-rate regime and policies to develop a more competitive export sector.” ARQAAM CAPITAL’S VIEW ON EGYPT- Arqaam Capital urges Egypt to act on FX adjustment: With the Ras El Hekma sale signedand the IMF agreement coming closer to fruition, Egypt should act on the FX adjustment in order to restore investors confidence, Senior Fixed Income Portfolio Manager at Arqaam Capital Fady Gendy said during an interview with Bloomberg. While Egypt has the needed “firepower” to go ahead with a full float, Gendy expects to see the EGP devalued to 40-45 against the USD. What he said: “We've seen how delays in reforms by Egypt in the past have cost EgyptEurobond market access and have also weighed on valuations of Egypt's [USD] bonds. More recently, we've become more bullish on Egypt as we felt that the country has increased in its geopolitical importance.” IMF AGREEMENT INCHES CLOSER AND CLOSER Egypt’s agreement over an expanded IMF loan program is “close,” Yellen says: US Treasury Secretary Janet Yellen told Reuters on Thursday that Egypt is inching closer to finalizing an agreement with the International Monetary Fund over expanding its current USD 3 bn loan program without giving further details. She also said that the US is “supportive of the IMF helping Egypt.” Remember: The IMF has been hinting that an expanded loan program with Egypt would beready soon, with IMF Managing Director Kristalina Georgieva saying that a finalized package would be ready “in a few short weeks” during the World Governments Summit in early February. 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