Economists told RT about the fate of the Egyptian pound and the IMF loan

Economists told RT about the fate of the International Monetary Fund loan to Egypt and what will happen to the pound after receiving the loan, especially after the finance minister confirmed that an agreement would be reached within a month or two with a lot.

Economic expert Dr. Hani Genena, a professor at American University, said Egypt’s finance minister did not provide an exact date or reason for delaying the loan, so it’s impossible to be sure the loan will be made available. carried out within the specified time frame.

He added: “I expect that everything will be cleared up at the economic conference. If the loan is indeed signed with the International Monetary Fund, it should be noted that the Fund will never agree that there is more than one price per dollar, which means that there is an official price and a black market, and the exchange rate must be uniform, which the IMF board calls proactive measure.”

Dr. Hani Genena noted that this is exactly what happened literally in 2016, when the central bank set the dollar, and it rose from 8.8 to 13 pounds, and the dollar’s rise in price coincided with the rise in fuel prices. , and therefore the Egyptian State complied with the conditions of the International Monetary Fund in both cases, and the conditions of the International Monetary Fund were met in both cases.

The expert continued: “I expect that after the agreement is completed, the same scenario will take place, so that the price of fuel will be changed and the dollar will be freed again until the gap between the official and parallel exchange rates is completely closed.”

He indicated that everything he presented was an expectation, emphasizing that, in his opinion, the government seeks, from his point of view, to find other alternatives to the International Monetary Fund loan, and noted that the central bank in this case should raise the interest rate . stop speculative transactions with the pound for the time of its release, concluding their statements that the dollar at that time, of course, will rise to the level of 23 pounds, but if it is available on the market, its price will gradually decrease.

For its part, another economist, Hani Abul Photoh, said: “According to recent statements by the Egyptian finance minister, Egypt hopes it can at least reach an expert-level agreement on the funding required from the International Monetary Fund within one to two months. which is contrary to the Prime Minister’s previous statement in which he stated that negotiations with the International Monetary Fund were in the final stages.

Abul Photoh added: “In the same context, the cost of the loan has not yet been announced, because it is usually determined at the last stage of negotiations, which was confirmed by officials of the International Monetary Fund. one gets the impression that reaching an agreement with the International Monetary Fund is not a problem.” He stressed, therefore, that the Egyptian government is keen to look for other options, including affordable loans from China and Japan, as well as the possibility of issuing panda bonds in the Chinese market, green bonds and borrowing through Islamic bonds and sukuk.

Abul Photoh continued: “In light of the above, we should not be overly optimistic about receiving funding from the International Monetary Fund until the path of negotiations with the Fund is clear in the final stages of the negotiations. As for the exchange rate of the Egyptian pound, the Egyptian government believes that a flexible exchange rate will certainly be beneficial to the economy, and this is evident from the gradual devaluation of the pound by several piastres every day until the pound reaches its fair level. value.

Referring to another economic expert, Dr. Amr Youssef, an expert in economics, financial and tax law, he said: “It looks like the IMF loan has been delayed by about one to two months, according to the relevant announcements that were scheduled. during the current days to start with expectations and speculation about the Fund’s conditions and the suitability of Egypt’s economic situation to allow it to take this loan, and the size of the new loan is expected to reach about three billion dollars, after the ambition was directed to a larger quantity to complete the structure of economic reform.

In the past few years, questions have been raised about the terms under which one of the parties negotiates, the expectations of which indicated that they affect a large part of the citizens and support programs and alleviate the burden of the Egyptian citizen, which is the removal of subsidies. on fuel prices of all kinds in order to reduce the budget deficit, in addition to stopping the Real Estate Credit Initiative Assistance Program, in addition to other conditions that may affect aspects of the daily coexistence of citizens, to come to the top of the exchange rates of the local currency compared to foreign exchange must be fully released without conditions or restrictions in accordance with the principle of full float.

The expert continued: “In another context, the delay in these negotiations may seem counterproductive as a result of the programs and decisions that Egypt is making based on what Egypt is now getting from natural gas exports that have crossed the $6 billion a year barrier. , and aims to double that amount in the future. With the expected increase in Suez Canal revenue to more than $8 billion, in addition to targeting trade and local production, and a hundred billion dollar dream project. dollars, in addition to the fact that the Egyptian administration is concerned about the importance of achieving a strategic stockpile of some basic and necessary goods.

The expert explained: “In order for the issuance of local currency to remain the subject of the next action, either by raising the value of the dollar in front of it in order to reduce its value as a result, or by trying to support it and strengthen its bonds with a large economic protection program closed, which the fund has not officially announced announced so far, but it should be emphasized that the initial approval of the grant fund is a merit and a testament to the confidence in the Egyptian economy and what it intends to achieve in the long-awaited economic reform, to see Egypt in those days with great interest in the issue of industrial support. reality in light of the extraordinary turmoil that the world’s largest economies are experiencing and the rapid and frequent devaluation of their local currencies. As a result of the crises woven into the world, all countries of the world fall into its clutches, so that its inhabitants and residents can become witnesses of the bitterness of the upheavals of this inflation and what it does to change the classes of society.

Let’s find the program of the Egyptian economy, despite the high purchasing power of foreign currency compared to local and the complexity of production as a result of the use of raw materials and the dollar productivity that we find in the Egyptian economy, confused in providing these currencies for manufacturers and producers to make progress in the wheel of production and then developing, or providing them a fortiori to import materials with an important strategic dimension for Egypt, such as energy and food, and despite the difficulties of choice, we find a correspondence between these and those in order to achieve stability in the face of these crises and traps, so that the issue of international credit remains hostage to the advances of the Egyptian economy towards its credit and the guarantee of repayment of these credits later.

Source: RT

Nasser Hatem

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