Egypt Roundup: Dollar bonds, IMF agreement, Gaza patients
Dollar bonds
Egypt's sovereign dollar bonds experienced a notable increase of over 1 cent on Friday following the announcement by the International Monetary Fund (IMF). The IMF revealed that it had reached an agreement with the Egyptian government on crucial policy components, marking a significant step toward finalizing an economic reform program and augmenting a $3 billion loan, Reuters reports. The most prominent gains were observed in the 2027 note, which surged by 1.2 cents, reaching a trade value of 77.29 cents in the dollar, according to data from Tradeweb. The positive movement in bond prices suggests growing investor confidence and optimism surrounding the imminent finalization of the economic reform program. The agreement between Egypt and the IMF on key policy components is seen as a crucial milestone in the ongoing economic reform efforts. The proposed reforms aim to strengthen the country's economic resilience, foster sustainable growth, and attract foreign investments.
Gaza patients
Egypt has received 29 Palestinians, including injured and oncology patients, from Gaza on Wednesday through the Rafah crossing for medical treatment in Egyptian hospitals. Alongside the patients, 57 companions were also granted entry. The group has been admitted to various Egyptian hospitals, such as Al-Arish Hospital, Sheikh Zuwayd Hospital, Suez and Ismailia Medical Complex, and Al-Hayat Hospital in Port Said, Ahram Online reports. Tragically, two Palestinians previously admitted to Al-Arish Hospital succumbed to their injuries on Tuesday. A 68-year-old woman's body was transported back to Gaza for burial, while arrangements are being made to transport the other, a 75-year-old man. Since the commencement of the Israeli war on Gaza, Egypt has welcomed numerous injured Palestinians and patients for treatment, given the dire state of many Gaza hospitals due to the conflict. Until January 14, Egypt has received a total of 1,210 patients from Gaza for treatment in Egyptian and friendly countries' hospitals, accompanied by 1,085 companions. Approximately 23,000 individuals, including Palestinians, foreigners, dual nationals, and 2,623 stranded Egyptians, have crossed into Egypt through the Rafah crossing until mid-January.
Libya expulsion
Egypt's President Abdel-Fattah El-Sisi and Libya's head of the Presidential Council, Mohamed Al-Menfi, held a meeting on Thursday at the Presidential Palace in Cairo, emphasizing the urgent need to remove all foreign forces and mercenaries from Libya. The statement from the Egyptian Presidency highlighted their joint commitment to strengthen Libyan institutions, facilitate the electoral process, and fulfil the aspirations of the Libyan people while safeguarding their resources, Ahram Online reports. The Libyan Presidential Council and House of Representatives (HoR) had previously agreed in August 2023, during a meeting in Benghazi, to accelerate progress toward the much-anticipated presidential and parliamentary elections. These elections, initially scheduled for December 2021, have faced multiple delays due to disagreements among the country's rival factions. The current divide in Libya is evident between outgoing Prime Minister Abdulhamid Dbeibah in the west and parliament-appointed Prime Minister Oussama Hamad in the east, supported by Libyan army commander Khalifa Haftar. Since the uprising that led to the overthrow of longtime dictator Muammar Gaddafi in 2011, Libya has experienced persistent conflict involving various militias, jihadist groups, and foreign mercenaries.
Interest rate increase
Egypt's central bank increased key interest rates by 2% on Thursday. The Central Bank of Egypt's (CBE) Monetary Policy Committee (MPC) raised the overnight deposit rate, overnight lending rate, and the rate of the main operation by 200 basis points to 21.25%, 22.25%, and 21.75%, respectively. Additionally, the discount rate was elevated by 200 basis points to 21.75%. This decision aligns with a global trend of central banks tightening monetary policy to address inflation concerns amid a backdrop of slowing economic growth, Daily News Egypt reports. While some advanced and emerging economies have experienced a moderation in inflation, the MPC underscored the significance of geopolitical tensions and trade disruptions in the Red Sea as major contributors to Egypt's inflation outlook. The third quarter of 2023 saw a dip in Egypt's real GDP growth to 2.7%, with support primarily coming from the trade, agriculture, and communication sectors. Leading indicators point to a further slowdown in the fourth quarter, and the full-year outlook is impacted by regional instability and disruptions in Red Sea trade. Despite economic challenges, the unemployment rate remained stable at 7.1% in Q3.
IMF agreement
A team from the International Monetary Fund (IMF), led by Ivanna Vladkova Hollar, has reported "excellent progress" in discussions with Egyptian authorities on the first and second reviews of the country's economic reform program. The mission, conducted from January 17 to February 1, aimed to achieve a Staff Level Agreement (SLA) for the combined reviews supported by the IMF’s Extended Fund Facility (EFF), Daily News Egypt reported. “The IMF team and the Egyptian authorities have agreed on the main policy elements of the program. The authorities expressed a strong commitment to act promptly on all critical aspects of Egypt’s economic reform program,” said Vladkova Hollar in the statement. Both parties emphasized the importance of enhancing social spending to protect vulnerable groups, especially low and middle-income households impacted by rising prices. Virtual discussions will continue in the coming days to finalize the Memorandum of Economic and Financial Policies (MEFP) and determine the extent of additional support required from the IMF and other partners to address Egypt’s increased financing gaps resulting from recent economic shocks.
