2023-11-19 11:48:35
Egypt: A proposal to amend the strategy for dealing with the “debt file”
Representative Ahmed Samir, a member of the Economic Committee of the Egyptian Senate, revealed a proposal to reduce pressure on the pound in the country, through a new policy in dealing with the “Egyptian debt file,” in light of the country’s severe currency scarcity crisis.
Samir said in exclusive statements to Asharq Al-Awsat that the proposal, which he will present to the Senate Economic Committee for presentation in the plenary session, includes a plan to convert Egyptian debts into investments and projects, and targets the International Monetary Fund and the World Bank. He explained, “If an agreement is reached with these two institutions to reduce Egyptian debt and transfer part of it to projects and investments, as happens with some other countries, this will be reflected positively on the Egyptian credit rating.”
The financial report for last September, issued by the Ministry of Finance, revealed that Egypt spent 391.8 billion pounds on debt service in the first two months of the current fiscal year 2023/2024. An increase of 160 percent over the 149.9 billion pounds spent in the same period of the last fiscal year.
This widened the budget deficit to 3.2 percent of GDP during the first two months, from 1.4 percent the previous year.
The three credit rating agencies, Moody’s, Fitch, and Standard & Poor’s, lowered Egypt’s credit rating, in light of a record rise in sovereign debt and debt service, the most recent of which was Moody’s report, which lowered Egypt’s rating from B3 to Caa1.
Egypt is facing an economic crisis amid record inflation and a severe shortage of foreign currency, in addition to the high levels of borrowing over the past eight years to repay foreign debt, which has become an increasingly burdensome burden on the Egyptian budget. It was reflected in the living standards of all Egyptians.
Samir explained that the proposal currently being prepared regarding the status of the dollar in Egypt includes “developing a policy to pay Egyptian debts that differs from the current situation… It will be presented officially after the next presidential elections.” He refused to disclose the details of the proposal, but said that it was “within the framework of crystallization.”
Egypt is preparing to hold presidential elections next December, while seeking to increase the value of the credit facilities scheduled with the International Monetary Fund, amounting to $3 billion, in light of increasing external pressures as a result of the war in the Gaza Strip, which is adjacent to the Egyptian border.
In this regard, Director of the International Monetary Fund, Kristalina Georgieva, said that the Fund is “seriously considering” a possible increase in the loan program for Egypt, amounting to three billion dollars, as a result of the economic difficulties resulting from the war between Israel and the Palestinian Hamas movement.
Georgieva added on the sidelines of the Asia-Pacific Economic Cooperation Summit that the conflict is “destroying” Gaza’s population and economy, has “serious effects” on the economy of the West Bank, and also poses difficulties for neighboring countries Egypt, Lebanon and Jordan through losses in tourism revenues and high energy costs.
Egyptian Prime Minister Mostafa Madbouly said, on Saturday, in this regard, that the currency crisis that the country is suffering from is a “transient crisis” and will end in a very short period.
Moody’s expected that the proceeds from the sale of Egyptian assets would help restore the economy’s hard currency liquidity reserves, and set Egypt’s outlook at “stable.” The agency’s expectations reflect that Egypt will continue to receive financial support from the International Monetary Fund under…
The end of the presidential elections may be the beginning of a new reduction in the local currency, which Egypt has reduced 3 times since March 2022, by more than 50 percent against the dollar, amid an increase in transactions in the parallel market that recovered last week and reached peak levels for the dollar, which it had not reached. before.
Amending the Capital Law
Samir revealed that the Economic Committee is currently studying amending the capital law, to stimulate transactions on the Egyptian Stock Exchange by attracting new companies and increasing local and foreign offerings.
He added to Asharq Al-Awsat: “We are now at the beginning of the legislative chapter… amending the law on the capital market, stock exchange, and indirect investment is being studied by the Economic Committee in general for the law… and we will begin talking with specialists working in this sector as soon as possible to determine On the most prominent challenges.
Despite the rise in Egyptian stock market indices over the past weeks, and the main index recording a new record high of 24,300 points, supported by foreign purchases, in Thursday’s session, the last trading of the week, the market capitalization of shares of listed companies amounts to 1.6 trillion pounds.
Samir said in this regard: “We are currently comparing the Egyptian Stock Exchange to its Saudi counterpart… and therefore we see that the trading volume on the Egyptian Stock Exchange should double… We need more liquidity by offering more companies, and that is by increasing the incentives that we are studying.” now …”. He stressed: “In short, we are studying: what is required of the Egyptian Stock Exchange to be attractive, because the current situation is not compatible with the size of a large country like Egypt.”
Vision 2030
In his interview with Asharq Al-Awsat, Samir referred to Egypt’s Vision 2030, about which he said: “The current external and domestic pressures on Egypt are very great… on the economic and geopolitical levels… This situation requires major adjustments… which may go to… Egypt Vision 2030.
He said: “Attracting an investor has become very difficult, in light of uncertainty, investor fear, and competition with neighboring countries. We need incentives, and we have experiences such as Kenya, Morocco, and South Africa.”
He stressed: “We are still raising discussions on amending the vision. We are at the beginning of the sessions, and after the sessions end, we will have a clear vision regarding the final formula.”
Egypt had launched the first version of the Sustainable Development Strategy: Egypt Vision 2030, in 2016, as a basic focal point for the comprehensive development process, taking into account national priorities and ambitions to draw a road map that achieves sustainable development and meets the dreams and aspirations of the Egyptian people for a dignified and decent life, including… Maximizes the benefit of all components and capabilities of the Egyptian state.
In early 2018, Egypt decided to update its sustainable development agenda with the participation of all stakeholders from development partners, in order to keep pace with the changes that occurred in the local, regional and global context. The second version of Egypt’s Vision 2030 was concerned with explaining how the Egyptian contribution will serve the international agenda, and how this will serve the global context.
The updated vision, according to the Egyptian Presidency’s website, emphasizes “dealing and intersecting all issues from the perspective of the three dimensions of sustainable development: environmental, economic, and social. It is a comprehensive and coherent vision consisting of sectoral strategies for various government agencies.”
In view of the international, regional and local changes and challenges that the previous seven years witnessed, the Ministry of Planning and Economic Development updated the general vision last week through a participatory process. The updated version of “Egypt Vision 2030” was issued, which identified four governing principles that represent the main pillars that govern the implementation of the six strategic goals of the vision using seven enablers that represent acceleration tools for achieving sustainable development in Egypt.
Egypt Vision 2030 focuses on improving the quality of life of the Egyptian citizen and improving his standard of living in various aspects of life, by emphasizing the consolidation of the principles of justice, social integration, and the participation of all citizens in political and social life. This comes along with achieving high, inclusive and sustainable economic growth, enhancing investment in people and building their creative capabilities by encouraging increased knowledge, innovation and scientific research in all fields.
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