THE WEEKLY Thursday Issue # 31 EGYPT S NET INTERNATIONAL RESERVES DECLINE The Central Bank of Egypt (CBE) announced that Net International Reserves (NIR) dropped by 11.5% to USD15.54 billion at the end of July 2016 compared to the previous month. This decline is attributed to the regular payment of debts owed to Paris Club, that amounted to USD715 million, besides needs for petroleum products and basic commodities, including food and medicine. It also coincided with the repayment of the last remaining debts owed to Qatar (USD1.02 billion) and first tranche of Libya s deposit at the CBE (USD250 million). It s worth noting that the Egyptian Cabinet approved plans to issue USD3 billion to USD5 billion Eurobonds, aiming to diversify the country s sources of foreign currency. The CBE foreign exchange reserves are currently composed of gold worth USD2.602 billion, foreign currencies of USD11.991 billion, Special Drawing Rights (SDRs) worth USD789 million, and loans to the International Monetary Fund worth USD46 million CBE Statement Daily News Egypt 8 th August 2016 Egypt s foreign-currency reserves dropped to the lowest level in 16 months in July after authorities repaid about USD2 billion in debt, highlighting the pressure the government is facing as it seeks a USD12 billion International Monetary Fund loan Bloomberg 8 th August 2016 IN THIS ISSUE... New Rise In Electricity Prices Annual Headline Inflation Stabilizes Suez Canal Revenues Increase Launching One-Person Companies Approval Downturn Trend Dominates Automotive Sales Harsher Punishments For FX Trading In Black Market A WORLD OF REAL POSSIBILITIES 1
NEW RISE IN ELECTRICITY PRICES The Egyptian Ministry of Electricity announced on the 8 th of August the new rise of electricity prices according to its five-year reform program, which began in 2014, aiming to gradually eliminate electricity subsidies over the next few years to reach EGP4 billion in 2017 and zero in 2018. Prices increase will range from 25% to 40% on residential use, to be applied retroactively as of July 2016, as follows: Average Monthly Consumption (KW/H) 2015/16 Prices 2016/17 Prices % Increase Average Monthly 2015/16 Prices 2016/17 Prices % Increase Consumption (KW/H) 50 4.8 6.5 35.4% 650 207.3 279 34.6% 100 12.5 17 36% 750 290.3 386 33% 200 35 49 40% 1000 467.8 623.5 33.3% 300 68.5 93 35.8% 2000 1,307.8 1,920 46.8% 400 106 141.5 33.5% 3000 2,147.8 2,870 33.6% 500 146.5 196.5 34.1% 4000 2,987.8 3,820 27.9% 600 187 251.5 34.5% 5000 3,827.8 4,770 24.6% Inflation may increase to around 15-16% in September once full effect of the aforementioned reforms is combined Arqaam Research Daily News Egypt 9 th August 2016 Egypt s annual urban inflation registered 14% in July 2016, unchanged from the previous month, compared to 8.4% in July 2015. The Central Agency for Public Mobilization and Statistics (CAPMAS) attributed the annual rise to the food and beverage price hikes, which recorded 19.1% YOY in July, in addition to a 32.7% jump in healthcare prices during the same period. Hikes in food and beverage prices are attributed to the rise in the prices of vegetables, cereals and meat and poultry by 42.6%, 30% and 9.5% respectively Monthly Inflation Report CAPMAS 10 th August 2016 Head of the Suez Canal Authority, Mohab Mameesh, announced during the first anniversary celebration of the New Suez Canal inauguration, that the Canal revenues increased by 4% during the first 7 months of 2016 compared to the same period last year, reaching USD3.18 billion, despite the slowdown in global trade. Egypt s Cabinet approved, on the 3 rd of August, a draft law allowing individuals to launch one-person companies as part of its efforts to support Small and Medium Enterprises (SMEs) and integrate them into the formal sector. The draft law has been referred to the Parliament for discussion. 2
Automotive sales declined by 26.4% over H1 2016 compared to the corresponding period one year earlier, where total sales registered 101,669 units. Automotive sales have progressively retreated following the foreign currency problem that hit the Egyptian economy at the beginning of 2016, causing a hike in importing costs and vehicles prices accordingly. Sales of passenger cars retreated by 26% during H1 2016 compared to the same period last year. Buses and trucks witnessed a similar setback, where their sales declined by 30% and 27% respectively during the period Automotive Market Information Council (AMIC) Report June 2016 Egypt s Parliament approved amendments to a law regulating foreign exchange market, setting prison sentences to up to 10 years and EGP1 million-egp5 million fines for trading foreign currency in the black market. 3
EGYPT AT GLANCE EXCHANGE RATES USD EURO Sterling Pound 8.85 0% * Average Buy & Sell Prices For ALEXBANK W/W M/M Y/Y YTD 0% 13% 13.5% 9.89 0.4% 1.2% 15.2% 16.4% 11.52-1.7% 0.4% -5.3% -0.2% 14 13 12 11 10 9 8 7 6 5 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 EGP per USD EGP per Euro EGP per Pound Sterling 11.52 9.89 8.85 10000 STOCK MARKET W/W M/M Y/Y YTD EGX 30 8,384.72 1.6% 11.7% 4.4% 18.3% EGX 9000 8000 7000 6000 5000 4000 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 EGX 30 EGX 70 (Rel.) EGX 100 (Rel.) 8,384.72 6904 6482 TB S AUCTION INTEREST RATES Auction Date 7 August 2016 11 August 2016 7 August 2016 11 August 2016 Maturity Average Yield % 91 Days 14.089 182 Days 15.402 273 Days 15.730 375 Days 15.914 Current* Previous** Overnight Deposit Rate 11.75% 10.75% Overnight Lending Rate 12.75% 11.75% Corridor Rate * at June 2016 ** at March 2016 12.25% 11.25% FX-AUCTION RATES Auction Date 9 th August 2016 2 nd August 2016 USD 8.7800 8.7800 4
Hot Air Balloons, Luxor, Egypt T : +2 02 2399 2000 E : research@alexbank.com Head of Research Emil Eskander emil.eskander@alexbank.com Research Manager Hemat El Masry hemat.elmasry@alexbank.com Senior Associate: Sahar Ezz El Arab sahar.ezzelarab@alexbank.com Research: Mariam Massoud mariam.massoud@alexbank.com Nahla Abdel Azim nahla.abdelazim@alexbank.com Mirna Mohsen mirna.aziz@alexbank.com Copyright Notice. The Weekly is a publication of ALEXBANK. No part of this publication may be reproduced or duplicated without the prior consent of ALEXBANK.This publication constitutes a summary of published news, quotes and economic indicators. This material does not constitute analytical economic research nor should be treated as such. All charts and graphs are from publicly available sources or proprietary data. Any views expressed in this publication do not necessarily reflect the opinion of ALEXBANK. The news, views and quotes within this publication are gathered from sources deemed to be reliable but which have not been independently verified. ALEXBANK does not make any guarantee to the accuracy or reliability of such information. AlexBank shall not be liable for any losses or damages incurred or suffered as a result of using its publications in part or in their entirety. 5