Download IMF LOAN EGYPT RECEIVES

THE WEEKLY
Thursday
17th Nov. 2016
Issue # 45
EGYPT RECEIVES
IMF LOAN
The Executive Board of the International Monetary Fund (IMF) approved, on 11th
November, the three-year USD12 billion loan agreement to Egypt, to support the
country’s reform program. The first tranche of the loan, worth USD2.75 billion, has been
received by the Central Bank of Egypt (CBE) following the board’s approval.
The remaining amount will be disbursed over the duration of the program, subject
to five reviews.
It’s worth noting that Egypt was able to secure the USD6 billion in bilateral financing required to obtain the loan.
Egypt’s reform program focuses on the following main pillars: liberalization of the foreign exchange system, Inflation-targeted
monetary policy, strong fiscal consolidation to ensure public debt sustainability, strengthening social safety nets, structural reforms
to promote inclusive growth and create jobs, and securing fresh external financing to close the financing gaps.
“The loan will help the country’s foreign reserves jump to more than USD23 billion from the current USD19.04 billion
registered at the end of October”
Tarek Amer
Central Bank of Egypt’s Governor
Ahram Online
13th November 2016
“The economic reform program is by the Egyptian government for the Egyptian people to help the Egyptian economy”
Christine Lagarde
Managing Director of the IMF
Daily News Egypt
12th November 2016
IN THIS ISSUE...
S&P Revises Egypt’s Outlook To Stable
Egypt’s Debt Instruments Become More Attractive
Banque Du Caire In The Local Stock Market In Q2 2017
Moody’s Affirms Floatation As Credit Positive
BP To Invest USD13 Billion By 2020
A WORLD OF REAL POSSIBILITIES
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S&P Revises Egypt’s Outlook
Standard and Poor’s Rating agency (S&P) revised, on 11th November, its outlook
on Egypt’s sovereign credit rating to “stable” from “negative”, affirming the ‘B-’
credit rating on Egypt.
The “stable” outlook is based on the IMF’s support to the government’s economic
reform program. The agency stated that Egypt’s economy is expected to start
recovering in 2018 and 2019 due to foreign direct investment inflows and domestic
consumption.
“We revised the outlook to stable to reflect the balance between Egypt’s long-standing external and fiscal vulnerabilities
and our expectation that the IMF’s EFF program will provide external financing to Egypt to meet its foreign exchange
requirements over the coming 12 months”
S&P Press Release
CPI Financial
13th November 2016
Egypt’s Debt Instruments Become More Attractive
International investments banks and hedge funds expressed their interest in buying
Egypt’s debt instruments to benefit from their high yields, especially after floating the
Egyptian Pound and eliminating exchange rate risk. Merrill Lynch, affiliated to Bank
of America, one of the largest investment banks in the world, advised international
investors and financial institutions to invest in Egyptian Treasury Bills, citing a promising
outlook for it. Bank of America also recommended investors to purchase Egyptian
Treasury Bills for the term of six months.
This move raises the prospect of recapturing the USD10 billion that were diluted from the local Treasury Bill market in the
aftermath of the 2011 uprising.
On Thursday, the 10th of November of 2016, demand for 12-month debt was the highest in more than a year, helping the
government reduce yields to 18.90%, compared with 20.52% applied in the aftermath of EGP floating.
“This is a story which potentially should improve. You had a huge foreign-exchange adjustment, rates have gone up and
now you have IMF money coming in. Country risk is heading in the right direction”
Kevin Daly
Money Manager
Bloomberg
15th November 2016
Misr Financial Investments Company, Banque Misr’s investment arm and the owner of Banque du Caire, targets to offer 45% of
its stake in the state-run Banque du Caire on the local stock market in Q2 2017, aiming to increase the bank’s capital.
Moody’s investors services stated that the increased availability of foreign currency in Egyptian banks after floating the Egyptian
Pound is credit positive as it will help banks fulfill their customers need for foreign currency and reduce their net foreign liability
position. Meeting demand on foreign currency is expected to support economic growth and boost banking activities.
“Banks have acquired USD3 billion in two weeks post floating the Egyptian Pound”
Tarek Amer
CBE Governor
Youm 7
17th November 2016
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The UK Embassy in Cairo stated that British oil company (BP) has plans to invest about
USD13 billion in Egypt before 2020. According to the embassy, British inflows to Egypt
recorded USD30.5 billion since 2011, with three major British companies (Vodafone,
Unilever and GlaxoSmithKline) investing EGP3.785 billion in Egypt last month. The
statement also indicated some pillars of Egypt’s economic reform program that include
allocating an additional 1%t of GDP for protecting the poor, increasing female labor force
participation and clearing outstanding arrears to international oil companies. It’s worth
noting that Egypt’s debts to international oil and gas companies reached USD3.58 billion
by the end of September 2016.
“We congratulate the government on setting out such a clear vision for economic reform and taking the first steps on
this difficult but necessary road. The UK experience is that while challenging for citizens, seeing these reforms through to
completion will lead to a more solid economy in the future”
UK Embassy Statement
Ahram Online
14th November 2016
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EGYPT AT GLANCE
EXCHANGE RATES
17th November 2016
W/W
M/M
Y/Y
YTD
USD
15.87
-3%
79%
103%
103.3%
EURO
16.98
-4.7%
74.8%
104.1%
99.9%
Sterling Pound
19.76
-2.8%
83.4%
66.7%
71.1%
22
21
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
Nov-15
19.76
16.98
15.87
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
EGP per USD
May-16
Jun-16
EGP per Euro
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
EGP per Pound Sterling
* Average Buy & Sell Prices For ALEXBANK
11,221.56
12000
11000
STOCK MARKET
10000
EGX
9000
8,687
7,895
8000
7000
6000
17 November 2016
th
EGX 30
11,221.56
W/W
M/M
Y/Y
YTD
5%
36.1%
75.1%
58.3%
TB’S AUCTION
Auction Date
5000
4000
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
EGX 30
Apr-16
May-16
EGX 70 (Rel.)
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
EGX 100 (Rel.)
INTEREST RATES
Current* Previous**
Maturity
Average Yield %
13 November 2016
91 Days
18.028
Overnight Deposit Rate
17 November 2016
182 Days
17.716
13 November 2016
273 Days
17 November 2016
357 Days
Overnight Lending Rate
14.75%
15.75%
11.75%
12.75%
+300 bp
+300 bp
18.715
Corridor Rate
15.25%
12.25%
+300 bp
17.606
* at November 2016
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** at June 2016
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Sahl Hashish, Hurghada, Egypt
T : +2 02 2399 2000 E : [email protected]
Head of Research
Emil Eskander
[email protected]
Research Manager
Hemat El Masry
[email protected]
Research:
Mirna Mohsen
Senior Associate:
Sahar Ezz El Arab
[email protected]
[email protected]
Nahla Abdel Azim
[email protected]
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