Egypt’s economy set for a rebound in 2022

Egypt’s economy set for a rebound in 2022
S&P’s rating of the North African country is constrained by its wide fiscal deficit, large public debt and low-income levels. (Shutterstock)
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Updated 08 May 2021

Egypt’s economy set for a rebound in 2022

Egypt’s economy set for a rebound in 2022
  • Net foreign assets in banks rise by 8 percent to $23.54 billion in Q1

CAIRO: Egyptian banks recorded a jump in net foreign assets during the first quarter of this year.

According to data issued by the Central Bank of Egypt (CBE), foreign assets in the country’s banks rose 8 percent to $23.54 billion by the end of March, compared to $21.73 billion in December 2020. Foreign assets refer to the value of overseas assets owned by a nation, minus the value of its domestic assets that are owned by foreigners, adjusted for changes in valuation and exchange rates. According to the CBE, during the first quarter of 2021 foreign commitments by Egyptian banks increased by about $1.907 billion to a record $19.885 billion, compared to $17.977 billion in December 2020. Egypt’s gross domestic product (GDP) growth will begin to rebound from 2022 on its foreign reserve buffers and debt market access, ratings agency S&P Global said, as it affirmed the country’s credit rating at B/B with a stable outlook.

Real GDP growth will average 5.3 percent between 2022 and 2024, S&P forecasts, due to higher public and private investment. That compares to an expected 2.5 percent growth in 2021.

Still, S&P’s rating is constrained by Egypt’s wide fiscal deficit, large public debt and low income levels.

But ongoing fiscal and economic reforms present strong medium-term growth prospects for Egypt, and recovering growth and lower domestic interest rates will put the debt ratio back on a downward path, the new report said.

“We expect Egypt’s foreign exchange reserves and access to domestic and external debt markets will allow it to cover higher external financing needs and upcoming maturities,” the report added.

FASTFACTS

• During the first quarter of 2021 foreign commitments by Egyptian banks increased by about $1.907 billion to a record $19.885 billion.

• Egypt forecasts that it will generate $6 billion in income from tourism activities.

Egypt’s main sources of foreign exchange will remain under pressure as tourism and Suez Canal receipts still struggle amid the pandemic, the report warned.

Last week, Egypt forecast that it will generate $6 billion in income from tourism activities in 2021/2022 as the tourism sector started to gradually recover.

Egypt’s Minister of Planning and Economic Development Hala El-Saeed the government expects to gain $6 billion from the Suez Canal in 2021/2022, in addition to increasing foreign investment rates to $7.4 billion during the fiscal year.

Regarding the main objectives of the 2021/2022 development plan, the minister forecast a growth rate of 2.8 percent in the current fiscal year, while the government aims to achieve growth of 5.4 percent in the next fiscal year. She added that the government is aiming for inflation to be 5.6 percent in the current fiscal year and 6 percent the following year.

The minister pointed out that the current fiscal year is expected to end with an average rate of 7.5 percent, adding that the government aims to gradually reduce this to 7.3 percent in the next fiscal year.


Palestinian Monetary Authority considers launching its own digital currency

Palestinian Monetary Authority considers launching its own digital currency
Updated 7 min 29 sec ago

Palestinian Monetary Authority considers launching its own digital currency

Palestinian Monetary Authority considers launching its own digital currency
  • Digital currency would be a mostly symbolic measure

RIYADH: The Palestinian Monetary Authority (PMA) is considering a possible issuance of a digital currency, as a symbolic blow for monetary independence from Israel, Bloomberg reported.

Two studies on cryptocurrencies are underway and no decision has been made yet, but the hope is to eventually use digital currency “for payment systems in our country and hopefully with Israel and others to use for actual payments,” Palestinian Monetary Authority Governor Feras Milhem said in an interview with Bloomberg Television.

Palestinians agreed not to immediately create their own currency, under their 1990s accords with Israel, and their economy primarily uses the Israeli shekel, along with the Jordanian dinar and US dollar.

Palestinian banks sometimes have to borrow to cover foreign-currency payments to third parties due to Israeli restrictions on large cash transactions aimed at cracking down on money laundering. That could be one reason a digital currency would be attractive to the Palestinian monetary system, according to Bloomberg.

However, the practicality of such a move is questionable.

“The macroeconomic conditions don’t exist to allow a Palestinian currency — digital or otherwise — to exist as a means of exchange,” said Director of Palestine Economic Policy Research Institute Raja Khalidi.

However, the issuance of some kind of digital money could “send a political signal to show the apparent appearance of monetary autonomy from Israel,” he said.

The Palestinians are joining monetary authorities from Sweden to China in examining the potential of national digital currencies as the dwindling use of notes and coins threatens to upend traditional payment methods.

Former Senior Adviser of the Bank of Israel governor, Barry Topf said that a Palestinian digital currency would unlikely be a real means of exchange. “It’s not going to replace the shekel or the dinar or the dollar. It’s certainly not going to be a store of value or a unit of accounting,” he said.


IHC’s Alpha Dhabi to list on ADX with $2.72bn paid-in-capital

IHC’s Alpha Dhabi to list on ADX with $2.72bn paid-in-capital
Updated 25 June 2021

IHC’s Alpha Dhabi to list on ADX with $2.72bn paid-in-capital

IHC’s Alpha Dhabi to list on ADX with $2.72bn paid-in-capital
  • Abu Dhabi IPO slated for June 27

ABU DHABI: Alpha Dhabi Holding (ADH) announced its intention to proceed with an IPO and listing of its ordinary shares on the Abu Dhabi Securities Exchange (ADX) on Sunday 27th June with 10 billion Emirati dirhams ($2.72 billion) paid-in capital, WAM reported.

The offering is expected to involve a sale of existing shares to individuals and other investors in the UAE and to qualified institutional and other investors.

“We have made the journey to become a public company in a way that’s going to have a positive reflection on our growth plan, and as a public company we will have a stronger capital structure to invest in additional verticals, expand commercially and accelerate growth both organically and through acquisitions,” said ADH Chairman Mohamed Thani Murshed Al Rumaithi.

IHC acquired a 45 percent stake purchase in ADH in April.

“We invested in Alpha Dhabi in early 2021 and we have used our sector experience to reorganize, integrate and transform Alpha Dhabi into a leading UAE holding company with special focus on construction and hospitality,” said Syed Basar Shueb, CEO IHC.

“The business is growing fast, highlighted by the 30 percent jump in first quarter revenue and gaining a listing on a major stock exchange will enhance its already strong platform and reputation. We are delighted to have supported its management team to deliver on its Abu Dhabi Stock Exchange IPO,” he said.

Incorporated in 2013, Alpha Dhabi operates across five industries, including health care, construction and hospitality. The company’s investment portfolio, local and international, includes 25 subsidiaries and 40,000 employees active in different fields.


Branson’s Virgin Galactic gets FAA approval to fly people to space

Branson’s Virgin Galactic gets FAA approval to fly people to space
Updated 25 June 2021

Branson’s Virgin Galactic gets FAA approval to fly people to space

Branson’s Virgin Galactic gets FAA approval to fly people to space
  • Company completed its first manned space flight from its home port in New Mexico in May
  • SpaceShipTwo craft can hold six passengers

WASHINGTON: Billionaire Richard Branson’s spaceship company Virgin Galactic Holdings Inc. said on Friday it received approval from the US aviation safety regulator to fly people to space, following a successful test flight last month.

Virgin Galactic completed its first manned space flight from its new home port in New Mexico in May, as its SpaceShipTwo craft, which can hold six passengers, glided to a landing on a runway safely with its two pilots.
The approval from the Federal Aviation Administration (FAA) comes at a critical time for Branson as his space venture faces competition from Amazon.com founder Jeff Bezos’ Blue Origin.
“Today’s approval by the FAA...give us confidence as we proceed toward our first fully crewed test flight this summer,” Virgin Galactic Chief Executive Officer Michael Colglazier said in a statement.
Virgin Galactic has about 600 people who have paid deposits and are waiting to experience weightlessness and see the curvature of the Earth at a cost of $250,000 each.
The craft will take off from a dedicated spaceport in the New Mexico desert in the US.
Branson is expected to take one of the flights this summer.


PIF appoints former Samba CEO as head of compliance

PIF appoints former Samba CEO as head of compliance
Updated 25 June 2021

PIF appoints former Samba CEO as head of compliance

PIF appoints former Samba CEO as head of compliance
  • Rania Nashar was a senior advisor to the governor since January

RIYADH: Saudi Arabia’s Public Investment Fund (PIF) said it appointed Rania Nashar, former CEO of Samba Financial Group, as its head of compliance and governance, Al Arabiya reported.

Nashar joined the fund as a senior adviser to its governor, Yasir Al Rumayyan, in January of this year. She brings with her more than two decades of experience in the banking sector.

PIF recently announced the appointment of Eyas Al-Dossari and Omar Al-Madhi as senior directors to its MENA investments division, and Abdullah Shaker as senior director to its Global Capital Finance Division.

The fund said this month that it had created the position of deputy governor to support the fund’s continued growth and expansion.

Saudi Arabia’s $430 billion PIF is one of the largest and most influential sovereign wealth funds in the world, and the main driver that supports the economic transformation of the Kingdom in accordance with the Kingdom’s Vision 2030 goals.

PIF has increased its employees from 40 in 2016 to more than 1,100 employees today.


Digital banks in Saudi Arabia to reduce costs and stimulate competition — SAMA

Digital banks in Saudi Arabia to reduce costs and stimulate competition — SAMA
Updated 25 June 2021

Digital banks in Saudi Arabia to reduce costs and stimulate competition — SAMA

Digital banks in Saudi Arabia to reduce costs and stimulate competition — SAMA
  • The new lenders will rank 12th and 13th in the Kingdom in terms of capital

RIYADH: Digital banks licensed in Saudi Arabia will help improve the quality and user experience for customers in the Kingdom, supporting innovation and reducing costs, said Yazeed Alsheikh, director for general of banking control at Saudi Central Bank (SAMA).

This will directly contribute to stimulating competition with local banks and financial technology companies, he told Al Eqtisadiah paper.

The Saudi Cabinet gave its nod to the Kingdom’s finance minister to issue licenses for the country’s first digital banks, STC Bank and Saudi Digital Bank, the Saudi Press Agency (SPA) reported on Tuesday.

STC Pay will be converted into a local digital bank, STC Bank, with capital of SR2.5 billion. A second lender, Saudi Digital Bank, will be formed by investors led by Abdul Rahman bin Saad Al-Rashed and Sons Company with capital of SR1.5 billion.

There is a difference between financial technology companies and digital banks, Alsheikh said.

“The financial technology companies are based mainly on innovation in the use of technology for a specific activity, and providing a specific financial product or service to the target segment of beneficiaries, through digital platforms or smart applications,” Al Sheikh said.

“Digital banks’ concept is broader and more comprehensive in providing Integrated banking products and services, such as accepting deposits, financing and other banking services through digital channels exclusively, and have different regulatory and supervisory requirements,” he said.

The two new digital banks in Saudi Arabia will rank 12th and 13th among the national banks operating in the Kingdom in terms of capital, once they obtain the final license to operate.