Egypt Roundup: IMF consultations, Putin’s visit, Red Sea attacks

Temple restoration

About 95 percent of the columns in Luxor's iconic Karnak Temple's Great Hypostyle Hall have been successfully restored, reviving the original engravings and colours of ancient Egyptian inscriptions. The restoration project, led by young Egyptian restorers from the Supreme Council of Antiquities (SCA) in collaboration with graduates from Luxor and South Valley universities, as well as, the Luxor Restoration Institute, adheres to international conservation standards and protocols, Ahram Online reports. Secretary-General of the SCA, Mostafa Waziry, confirmed that the restoration work involved meticulous cleaning of the columns' surfaces, removing accumulated sand, dust, and bird deposits that had obscured the original engravings and colors for ages. The extensive project commenced in July 2021, beginning with the restoration of 28 columns out of the total 134 columns in the hall, each towering at a height of 20 meters. Karnak, the largest and most important religious complex in ancient Egypt, has undergone continuous development for over 1000 years.

Putin’s visit

Russian President Vladimir Putin is set to visit Egypt to partake in the foundation-laying ceremony for the fourth reactor at the Dabaa Nuclear Power Plant. The spokesperson for the Russian presidency, Dmitry Peskov confirmed the preparations for President Putin's participation in this crucial event, emphasising the importance of the collaboration between Russia and Egypt in the field of advanced nuclear technology. Peskov, during a press conference, stated, "Our cooperation with Egyptian partners continues in various fields, and Egypt is a very important partner, including in the field of this advanced technology, which is crucial for further development in Egypt," Ahram Online quotes him. He also asserted Russia's unparalleled leadership in the global nuclear industry, providing superior, cost-effective, and high-quality services that make competition challenging for other participants in the market. The Dabaa Nuclear Power Plant, a joint venture between the Nuclear Power Plants Authority (NPPA) and Russia's Rosatom, is poised to feature four nuclear reactors, each with a capacity of 1.2 GW. Construction commenced on the first and second reactors in 2022, followed by the laying of the foundation for the third reactor in May 2023. The estimated total cost of the project stands at $30 billion.

Somalia support

President Abdel Fattah al-Sisi has declared Egypt's commitment to Somalia's security, emphasising the country's Arab identity and the rights accorded to it by the Arab League Charter. During a joint press conference with Somali President Hassan Sheikh Mahmoud at the Federal Palace, President Sisi noted that Egypt will not allow any threats to Somalia or compromises on its security. He added that Egypt stands ready to intervene if the need arises. "Clearly, Egypt will not allow anyone to threaten Somalia or affect its security…No one will try Egypt and try to threaten its brothers, especially if its brothers ask it to intervene," he is quoted by Akhbarelyom. President Sisi expressed Egypt's clear position on the agreement between Somaliland and Ethiopia, noting that Egypt rejects the agreement. He reiterated Egypt's refusal to interfere in Somali affairs or compromise its territorial integrity.

Red Sea attacks

Egypt has increased the transit fees for the Suez Canal over the need to prioritise the foreign currency inflow, despite a decline in maritime traffic caused by Houthi attacks on shipping in the Red Sea. Revenue from the waterway, which serves as the shortest route between Asia and Europe, has declined due to concerns about potential missile and drone attacks, leading some ships to avoid the canal, Alarabiya News reports. While traffic volumes through the Suez Canal were down by 30 percent between January 1 and January 11 compared to the previous year, the canal authority head, Osama Rabie, says Egypt has decided to move forward with the long-planned fee hike. The country aims to offset the revenue loss by generating additional income from the ships still transiting through the canal. Rabie acknowledged security concerns, stating that commercial ships might opt for longer routes to avoid entering a perceived war zone. Amid these challenges, Egypt is in discussions with the International Monetary Fund (IMF) regarding the potential doubling of its current $3 billion rescue package. The Houthi attacks on vessels in the Red Sea have heightened pressure, with the group pledging to escalate its attacks despite airstrikes by the US and its allies.

IMF support

A team from the International Monetary Fund (IMF), led by Mission Chief for Egypt Ivanna Vladkova Hollar, is in Cairo for discussions on the first and second reviews of Egypt's reform program, supported by the IMF's Extended Fund Facility (EFF). The ongoing discussions between the IMF and Egyptian authorities focus on a set of policies to support the completion of the first and second reviews of the EFF agreement, Ahram Online reports. Analysts anticipate that Egypt's new IMF program could reach $8.0 billion due to preferential treatment, taking into account the challenging external environment, Egypt's geopolitical significance, and approximately $5.4 billion in principal due to the IMF in 2024. “Egypt’s new IMF programme could reach USD 8.0 billion due to preferential treatment. This is a result of the more difficult external environment, Egypt's geopolitical importance, and about USD5.4 billion in principal due to the IMF in 2024. We continue to expect the Egyptian pound adjustment to start in late March 2024 or early in Q2 2024, as by then inflation will be slower, around the mid-20% range. Our forecast remains that the pound will weaken to between EGP40 and EGP45 against the USD, with risks skewed towards a weaker rate of EGP50/1USD," Ramona Moubarak, the head of MENA Country Risk at Fitch Solutions, said.