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“Two solutions without a third”.. How can Egypt pay its external financial obligations?



“Two solutions without a third”.. How can Egypt pay its external financial obligations?

Egypt is suffering from a “foreign currency shortage” crisis, approaching a billion in short- and long-term foreign arrears, raising concerns about “the country’s inability to meet its obligations,” while experts reveal to “Al”. -Hurrah” scenes for that and the possibility of repaying those dues.

Egypt is facing the worst economic crisis in its history. In a year, the Egyptian pound has lost half its value against the US dollar, while the country’s foreign exchange reserves have dwindled.

A severe currency shortage has raised concerns about Egypt’s ability to repay its foreign debt, and three major credit rating agencies have downgraded Egypt’s credit outlook since April.

In May, Fitch Ratings downgraded Egypt’s rating to “B” from “B+” and changed its outlook to negative.

In a statement, the company spoke about the increase in external financing risks in light of higher financing requirements and tightening of external financing conditions.

In late April, credit rating agency Standard & Poor’s announced that it had revised Egypt’s credit rating from “stable” to “negative” due to expected “larger requirements for external financing” in relation to public finances. .

For its part, Moody’s said maturity dates for Egypt’s large external debt had become an “increasing challenge”.

Three sources of hard currency

Amr Saleh, professor of political economy and former adviser to the World Bank, talks about the three main sources of foreign exchange in Egypt, which are “tourism, Suez Canal transit fees and remittances from Egyptians working abroad”.

Foreign currency earnings from tourism and Suez Canal transit fees increased, but remittances from Egyptians working abroad decreased as more people transferred their money through the parallel market, according to an interview with Al-Hurrah.

At the official rate the dollar is approximately 31 pounds, but on the black market the price reaches about 39 pounds.

He points out that Egypt is suffering from a “severe shortage of hard currency,” which is putting increasing pressure on the Egyptian economy, as the country now “needs to increase its foreign exchange inflows.”

According to a former World Bank adviser, Egypt needs to increase its “hard currency inflows and diversify its sources”.

For his part, the researcher of political economy, Abu Bakr El-Deeb, indicates the improvement in the foreign exchange inputs of the country, after the increase in the size of the GDP, the increase in the exports and income of the tourism sector. Channel and direct investments.

In an interview with Al-Hurrah website, he explained that the growth rate of Egyptian exports in the 2021-2022 fiscal year increased by 53.1 percent to $43.9 billion.

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According to El-Deep, tourism revenue increased by 121.1 percent to reach $10.7 billion, while Suez Canal revenue was around $8 billion.

Foreign direct investment flows also increased during the same period, reaching nearly $9 billion, according to El-Deep.

In early May, it emergedCentral Bank of Egypt dataRemittances from Egyptians working abroad fell 23 percent in the first half of the current fiscal year compared to the same period in 2021-2022.

Remittances by Egyptians abroad were $12 billion in the first half of 2022-2023, compared to $15.6 billion in the same period last fiscal year.

Revenue from the Suez Canal is Egypt’s main source of foreign exchange and is set to hit eight billion dollars in 2022, a record figure since the opening of the canal in 1869, according to data from the authority.

In Egypt, the tourism sector suffered a series of blows from the beginning of 2011 until the Russian-Ukrainian war that broke out in February 2022, affecting visitor arrivals from both countries. Egypt, according to “AFP”.

Nearly two million Egyptians work in the tourism industry and make up 10 percent of the country’s gross national product, according to “Agence France Presse.”

‘Gigantic’ external commitments

Last week, data from the Central Bank of Egypt showed that Egypt had $2.49 billion in short-term debt in June, while the second half of 2023 included $3.86 billion in short-term debt and $11.38 billion in long-term debt. debt.

El-Deeb clarified that the total value of Egypt’s obligations for the current fiscal year 2022-2023, which started last July and ends next July, is about 20.2 billion dollars.

Those pledges totaled about $8.7 billion in the first half ending December 2022.

He notes that Egypt owes about $83.8 billion in foreign debt payments over the next five years.

According to El-Deeb, Egypt is obligated to pay $10 billion to the International Monetary Fund over the next 4 years, and $28 billion by the end of 2023 to avoid debt service and current account deficits.

A political economy researcher explains that Cairo owes between 5 and 6 billion dollars a month.

Why did Egypt accumulate debt?

In the past eight years, external debt has quadrupled, and external debt has risen from less than $40 billion in 2015 to $162.9 billion in December 2022, central bank data shows.

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Borrowing increased by $8 billion in the last quarter of 2022 alone.

Economist Abdul Nabi Abdul Muttalib points out that the borrowing policy is based on the “economic theory” that “the higher your borrowing capacity, the greater the attraction of FDI.”

The theory achieved “imaginary success,” and once borrowing began, about $30 billion of hot money flowed into the country, which quickly exited the Egyptian market after the Russo-Ukrainian war, according to his interview with Al-Hurrah.

Abdel Muttalib says this “negatively affected the economic situation in Egypt” and led to the country’s debt accumulation.

For his part, El-Deeb describes the reasons for the high level of Egyptian foreign debt.

He mentions the lack of trade balance between exports and imports, as well as huge investments in infrastructure, dealing with the consequences of the corona pandemic and the consequences of the Russian-Ukrainian war.

Is Egypt defaulting on payments?

Abd al-Nabi Abd al-Muttalib denies the possibility of “Egypt’s failure to pay external obligations” and affirms that Egypt will be able to meet all its external obligations based on “installments and interests”, even though it is scheduled until June 30. Second half of 2023.

El-Deeb, for his part, believes that external debt is still “within safe limits” despite a 5-fold increase in 10 years compared to GDP, which exceeds $450 billion.

“Cairo has not failed to pay its debts and financial dues on time and may do so in the future,” he says.

Amr Saleh explains that Egypt paid off $2.5 billion worth of foreign debt in two months at the end of last year.

In December 2022, Egypt made payments related to foreign debt, which was equivalent to about one billion dollars, and in November of the same year, it paid one and a half billion dollars, according to his speech.

A former World Bank consultant quotes this as saying, “Egypt can pay its obligations and not default on its debt.”

How to fulfill external obligations?

Egypt could meet all its external obligations through two solutions, but only through “revolutionary measures” involving “withdrawal from the country’s monetary reserves,” ignoring the recommendations of the International Monetary Fund, as Abdulmutallab put it.

He says, “At that time, Egypt will be able to maneuver around $10 billion,” which would “support” the Egyptian pound by about $6 billion this year.

According to him, with six billion dollars, it will be possible to “complement the value of the goods seized in Egyptian ports”, which will lead to economic recovery and restore confidence in the Egyptian economy.

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and announced on TuesdayCentral Bank of EgyptThe country’s net international reserves stood at $34.660 billion at the end of May, up from $34.551 billion in April.

Over the past two years, Egypt has withdrawn more than $40 billion from its net foreign assets in the banking system, part of which was used as a prop for the pound, according to Reuters.

The second solution, says Abdelmutallab, relates to responding to IMF requests to devalue the local currency, despite the risk at this point.

He explains that the equivalent of devaluation is to “raise prices” in the market.

He cites the fear that the “International Monetary Fund will fail to accept this reduction” as proof that the government is keeping its promises, and the demand to list the shares of listed companies on the stock market.

This would have “huge risks” in light of global inflation and “congestion in the dollar bond market”, so it would be better to draw from “cash balances” to settle outstanding debts in 2023, the economist said.

For his part, Amar Saleh favors a “withdrawal from cash reserves” scenario.

“That’s the main purpose of countries having cash reserves, and when there’s a crisis it can be withdrawn from,” he says.

Withdrawals will be made to finance payments that are not “large,” and the effects can be remedied by “issuing Treasury bills or borrowing from investment funds or international financial banks, whether African or Arab.” World Bank Consultant.

As for Abu Bakr El-Deeb, he calls on the Egyptian government to take 5 urgent steps to quickly repay the debt, the most important of which is to stop borrowing again, plan and organize those loans, rationalize spending and develop a financial culture.

His speech said Egypt needed measures to deal with the crisis, including setting a schedule of priorities in government investments, stress spending, stimulating tourism, industry and exports, supporting agriculture and trade, and promoting the private sector.

He points out the need for the government to adopt measures, policies and procedures that can achieve fiscal discipline, and move towards sustainable public debt, rational consumption, resource development, open investments and open investments and adopt a medium-term economic strategy. All restrictions on investors should be removed.

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Robert Kennedy Jr. decided to run as an independent in the US presidential election



Robert Kennedy Jr. decided to run as an independent in the US presidential election

US presidential candidate Robert Kennedy Jr. will announce his candidacy as an independent instead of continuing his long-running bid to defeat President Joe Biden as the Democratic nominee, complicating next year’s presidential election.

Kennedy, an anti-vaccination activist and member of a famous American political family, posted a video on YouTube on Friday asking Americans to join him in a “major announcement” in Philadelphia on October 9.

He said he would talk about a radical change in American policy.

Kennedy is the nephew of former President John F. Kennedy, who was assassinated in 1963, and the son of former U.S. Senator Robert Kennedy, who was assassinated during his 1968 presidential bid.

In April, Kennedy said he would challenge Biden to run for the Democratic nomination against the expected Republican nominee, former President Donald Trump.

Since then, Kennedy has complained that the Democratic Party has “basically blended together” with the Biden campaign, which has cost him a fair chance in the nomination race.

Many polls have Biden ahead of Kennedy.

Kennedy’s plan to run as an independent was first reported on the political website Mediaite.

In response to an emailed question from Reuters about the report, the Kennedy campaign responded by sending out its own video.

Democrats worried that any effort by a third party could shift votes away from Biden.

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Only since the beginning of this year… has the UN been concerned about migrants trying to cross the “death trap”.



Only since the beginning of this year… has the UN been concerned about migrants trying to cross the “death trap”.

More than 2,500 migrants have died or gone missing trying to cross the Mediterranean Sea to Europe since the start of 2023, an official from the United Nations High Commissioner for Refugees announced on Thursday.

“As of September 24, more than 2,500 people are dead or missing,” said Rubin Menegtivela, director of the UNHCR office in New York, during a Security Council meeting dedicated to the migrant crisis in the Mediterranean. That represents a nearly 50 percent increase compared to “1,680” people during the same period in 2022.

“Without public opinion, lives are being lost on the ground,” he asserted.

He pointed out that “the journey to West or East Africa and the Horn of Africa and Libya and the starting points on the coast is one of the most dangerous journeys in the world.”

He added, “Refugees and migrants traveling overland from sub-Saharan Africa face the risk of death and serious human rights violations at every step.”

According to statistics announced by Ruffin Minisdiola, between the beginning of the year and September 24, 2023, a total of 186,000 migrants arrived in Southern Europe (Italy, Greece, Cyprus and Malta), including 130,000 for Italy, “an increase of 83 percent compared to the same period in 2022.

In terms of countries of departure, between the beginning of the year and August 2023, more than 102,000 migrants tried to cross the Mediterranean Sea from Tunisia, and 45,000 from Libya.

Of this number, 31,000 were rescued at sea or intercepted and disembarked in Tunisia, and 10,600 are in Libya.

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Referring to the recent influx of large numbers of migrants to the Italian island of Lampedusa, the official stressed that “Italy cannot respond alone to the needs” of these migrants.

UN refugee agency to “establish a regional mechanism for the evacuation and redistribution” of migrants arriving by sea. Menaktivela reiterated the High Commissioner’s call, which raises disagreements among EU member states.

For his part, Russian Ambassador to the United Nations Vasily Nebenzia, who requested the meeting, denounced the EU for its role in the “death trap” in the Mediterranean.

The ambassador said: “We have the impression that the European Union is waging an undeclared war against migrants because they have no other, safe route.”

“The European Union only cares about the migration issue when it comes to Ukrainians,” Nebenzia added, expressing her regret that other migrants do not enjoy “the same level of solidarity”.

As for French Ambassador Nicolas de Riviere, referring to Russian contributions to UNHCR’s budget, he said, “Russia is not, as always, when it comes to responding decisively to humanitarian crises.”

He added, “Wagner’s presence in the Sahel region contributes to the instability of the region, which fuels terrorism and leads to the migration of residents.”

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US punishes former Sudanese foreign minister



US punishes former Sudanese foreign minister

On Thursday, the United States imposed sanctions on former Sudanese foreign minister Ali Karti, one of which was based in Russia, and accused him of exacerbating instability in Sudan, where fighting has claimed thousands of lives and displaced millions of civilians. ..

The move is the latest round of sanctions imposed by Washington since fighting broke out in Sudan in mid-April between the military and Rapid Support Forces..

Brian Nelson, the Treasury Department’s undersecretary for terrorism and financial intelligence, said in a statement that “the action will be held accountable for those who undermined efforts to find a peaceful and democratic solution in Sudan.”

He added: “We will continue to target those who work to perpetuate this conflict for personal gain.”

The Treasury Department said it targeted Karti, who was foreign minister under former President Omar al-Bashir, noting that Karti became head of the Sudanese Islamic Movement after al-Bashir was ousted in 2019..

Karti has been a prominent figure among the veterans and loyalists of Bashir’s regime since the Sudanese army seized power in 2021 and overthrew the civilian area..

The Treasury Department added: “(Karthi) and other Sudanese militants are actively obstructing efforts to reach a ceasefire to end the current war.”

Also sanctioned was Sudan-based GSK Advance, which the Treasury Department said was used as a procurement vehicle for Rapid Support Forces..

The company is said to be coordinating with Russia-based military supply company Avia Trade, which has been targeted by sanctions, to arrange for the purchase of spare parts and supplies for drones previously purchased by Rapid Support Forces. Training work..

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US Secretary of State Anthony Blinken said in a separate statement that Washington moved this week to impose visa restrictions on people it considers part of efforts to undermine the democratic transition in Sudan..

The new sanctions come after actions taken against the deputy commander of the Rapid Support Forces this month and sanctions imposed by the US in June on companies accused of fueling the conflict..

The measure freezes the assets of targeted individuals in the U.S., generally prevents Americans from doing business with them, and also exposes those who engage in certain transactions with them to economic sanctions..

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