ما تفسير ما يحدث في مصر.. في يومين فقط الدولار يقترب من حاجز الـ 70 جنيهاً؟

Al Arabiya Business - الأسواق العربية

29 Jan 202406:59

Summary

TLDRThe transcript discusses the severe and continuous pressure on the Egyptian pound against the US dollar in the informal market. It outlines three main factors causing this: local economic issues like high debt and trade deficits; psychological factors like loss of confidence; and external factors like IMF conditions. Short term solutions proposed include incentivizing remittances from Egyptians abroad, promoting tourism, and restructuring debt. Medium term solutions include completely halting borrowing from IMF, providing incentives to industry, and establishing an economic crisis management team.

Takeaways

📑 The Egyptian pound's potential level is unpredictable and unlimited due to the market's randomness and the phenomenon of scarcity.
🔥 A series of economic, psychological, and external factors exert continuous intense pressure on the Egyptian pound against the US dollar in the unofficial market.
💰 The economic factors include a significant increase in external debt, both in principal and interest, severely impacting the foreign currency reserve and liquidity for goods and services in the official market.
🛠 Egypt imports about 75% of its needs, including strategic goods and production inputs, leading to a persistent deficit in the balance of payments and trade balance.
🔨 The flotation of the Egyptian pound in November 2016 and its aftermath significantly worsened inflation, deviating from targets and escalating prices.
🧐 Psychological factors and external influences further pressure the Egyptian pound in the parallel market.
📈 Solutions proposed include attracting remittances from Egyptians working abroad through exceptional measures and boosting the tourism sector.
💳 A suggestion to fix the Egyptian pound's exchange rate for a period to stabilize the economy, despite the potential disagreement with international financial institutions.
💵 Restructuring debt sustainably, through negotiations for loan extension or reduction of interest rates, and halting new borrowing.
🛡 Offering incentives to the industrial and agricultural sectors, including tax exemptions and near-zero interest rates on loans to localize production within three years.

Q & A

What are the main factors causing pressure on the Egyptian pound against the US dollar in the informal market?
-There are three main groups of factors: local economic factors like growing external debt and trade deficit; psychological factors affecting confidence; and external factors like the currency float shocks in 2016.
How does Egypt's reliance on imports impact the currency pressures?
-Egypt imports 75% of its needs which leads to a persistent trade deficit. This widens the foreign currency gap and limits Egypt's ability to support the pound or provide liquidity in the formal market.
What were the impacts of repeated currency floats since 2016?
-Each float increased inflation further from the target and raised interest rates, worsening macroeconomic indicators.
What solutions does the expert recommend in the short and medium term?
-Attracting remittances through incentives, promoting tourism, committing to not float the pound for 3-4 years despite IMF advice, restructuring debt, and providing incentives to industry and agriculture.
What is the expert's view on floating the Egyptian pound given current black market exchange rates?
-The expert is against any float at current levels as it would lead to more problems. The president has also drawn a red line against floating the pound.
Why can Egypt not keep borrowing from the IMF according to the expert?
-Egypt needs to completely stop borrowing and seek debt restructuring directly with creditors to reduce the burden.
How can Egypt support domestic industry in the medium term?
-By removing taxes and fees, providing near zero interest rate financing for 3 years, and incentivizing import substitution and local manufacturing.
What type of economic management does the expert recommend?
-The expert recommends forming an economic crisis management team that stress tests extreme scenarios and plans responses.
How can remittances help support the Egyptian pound?
-By attracting more remittances through incentives, and allowing expat transfers to be made at higher exchange rates.
What long-term solutions does the expert recommend?
-The expert leaves long-term solutions for the government to develop, focusing his recommendations on immediate and medium-term measures.

Outlines

00:00

😯 Factors Leading to Increasing Dollar Value Versus Egyptian Pound

Paragraph 1 discusses the continuing rise in dollar value compared to the Egyptian pound in the unofficial currency market. It outlines three key factors causing this pressure: local economic issues like growing external debt, psychological factors like dollarization fears, and external factors like demand for imports.

05:02

🤔 Potential Solutions to Stabilize the Egyptian Pound

Paragraph 2 explores potential solutions to stabilize the Egyptian pound against the dollar in the short, medium and long term. It argues against full or partial floating of the currency and suggests attracting remittances, promoting tourism, committing to a multi-year fixed exchange rate, and restructuring debt.

Mindmap

Keywords

💡currency devaluation

The script discusses the impacts of Egypt's currency devaluation, which is when the value of a currency declines relative to other currencies. The devaluation of the Egyptian pound led to high inflation, rising interest rates, and more expensive imports. This put pressure on Egypt's foreign reserves needed to support the currency.

💡inflation

Rising prices in Egypt due to currency devaluation and other factors. High inflation erodes purchasing power and standard of living. The script mentions how repeated currency devaluations in Egypt led to a vicious cycle of rising inflation.

💡foreign debt

Egypt's growing foreign debt burdens its economy with large interest payments and principal installments. This drains Egypt's foreign currency reserves needed to pay for critical imports and defend the currency.

💡balance of payments

The difference between money coming into Egypt from exports, loans, investments etc. and money going out for imports, loan payments etc. Egypt runs persistent balance of payments deficits, widening gaps in its foreign currency reserves.

💡interest rates

The cost of borrowing money or savings returns. The script mentions how inflation led to rising interest rates in Egypt, further fueling inflationary pressures.

💡remittances

Money sent home by Egyptians working abroad. The script advocates policies to attract more remittances to boost Egypt's foreign currency reserves.

💡tourism industry

A major source of foreign currency for Egypt that faces challenges. Promoting tourism is recommended to increase foreign currency inflows.

💡debt restructuring

Rescheduling debt payments by negotiating with lenders over longer repayment periods, lower interest rates etc. This helps struggling debtors. The script calls for Egypt to restructure its debts.

💡industrial policy

Government initiatives like tax breaks and cheap financing to boost strategic industries. This helps substitute imports and conserve foreign currency over the longer term.

💡crisis management

Forming an emergency economic team to manage the crisis, including running stress tests to prepare for unpredictable shocks that could further pressure the currency.

Highlights

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