Upper Egypt Gets Its First Ballet School Why Successive Illustrious Figures Had Been Keen to Hold That Post

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Upper Egypt Gets Its First Ballet School Why Successive Illustrious Figures Had Been Keen to Hold That Post Watani 14 August 2016 Chairman of the Board 8 Misra (Misra) 1732 and 11 Thul-Qeida 1437 Editor-in-chief Issue 809 Year 16 Youssef Sidhom Editorial Unprecedented swings in the Problems on hold Arab League: value of the Egyptian pound The far from against the dollar worries and possible unity? hurts Egyptians Youssef Sidhom Fady Labib Egyptian pound blues The Arab League (AL) has got a new secretary-general, the Egyptian eminent diplomat Ahmed Abul-Gheit. Mr Abul- The last two weeks in July saw Egyptians stunned at the havoc in happens, those who amass US dollars in fear of unexpected decline Gheit succeeds another prominent Egyptian the money markets owing to unprecedented swings in the Egyptian in the value of the Egyptian pound will inevitably attempt to get rid diplomat who held that post: Nabil al- Pound/US Dollar exchange rate. Even though the Central Bank of of the huge amounts of dollars in their possession, in order to avoid Araby. The Egyptian media celebrated Egypt (CBE) placed the exchange rate at EGP8.89 for the dollar, the large losses. This would in turn force the US dollar back against the the rise of yet another Egyptian to this shortage in hard currency drove the dollar up to EGP13.25 during Egyptian pound, he says. illustrious post, in an almost unbroken the third week in July. This was a full EGP2 higher than the week However, according to Mr Sharif there is another dimension to line of Egyptian secretary-generals since preceding it, and it drove a panic-stricken demand for more dollars as the crisis of the USD/EGP exchange rate. The huge swings it has the AL was founded in 1945. The string many Egyptians feared their national currency was close to crashing. The undergone over a short span of time point at speculation by traders who was only briefly interrupted in the 1980s following week, however, the pound gained in value, rising one pound profit from these swings. It was thus a good move by the government, when Egypt left the AL on account of against the dollar. No one seemed to understand the reason for the sharp he says, to combat the foreign exchange companies [mostly owned by Arab censure owing to Egypt’s 1979 peace swings in EGP/USD values, nor offer any prediction for the future. Islamists] which fuel the black market, now aptly labelled the parallel agreement with Israel. During that interval, market. It does not help, he explains, that Islamist jihadi terrorism in the Tunisian Chedli Klibi led the AL as Cause for optimism Sinai is promoting arms and drugs trafficking, increasing demand on secretary-general. It was not as though the Egyptian economy was crashing. Egypt is the dollar and placing further pressure upon the Egyptian pound. I received the news of the recent already on the path of economic reform, even though this constitutes a Egyptian-Egyptian change in the very bitter medicine. Last week, the government announced a partial Shrinking dollar resources topmost AL post with a sense of lift of the subsidy for electricity, raising prices for power consumption Banking expert Amir Alphonse explains that the huge recent drop suppressed bitterness, since I could not 40 per cent higher. The rise is bound to hurt all Egyptians, but must in the value of the Egyptian pound versus the USD is due to several help noting the meagre international ultimately serve to put the economy on the right track. reasons. Most prominent among them, he said, was the shrinkage of weight of the pan-Arab organisation on Egypt’s stock market index had been rising steadily during July, and the US dollar resources in Egypt, which are the Suez Canal revenue, the political, economic, commercial, and closed at a 13-month high on Thursday 28 July amid optimism over remittances from Egyptians working abroad, and income from military fronts. Did the AL succeed in Cairo’s talks with the International Monetary Fund (IMF). tourism and exports. “We thus need to create new US dollar resources uniting Arab ranks to render the Arabs Last May, according to a report by the Central Agency for Public in order to solve this crisis,” Mr Alphonse says. a force to be reckoned with in the world Mobilisation and Statistics, Egypt’s trade deficit shrunk 24.6 per “The question now is how can we direct the funds that will come of today? The hard answer is that no, it cent than a year earlier, with exports increasing by 9.1 per cent to from the IMF loan towards creating new investment projects in order did not. It actually never made it beyond 18.3 billion pounds, and imports decreasing by 13.3 per cent to 43.5 for these to generate new US dollar resources?” Mr Alphonse asks. acting as an ornamental umbrella that billion pounds. This was the outcome of the government policy to “It will be difficult to pay back the loan,” he pointed out, “if we use gathers under its shade all Arab States, promote exports and reduce imports in order to manage the shortage the IMF loan in any other direction.” He points to a series of very but with no impact whatsoever on the in hard currency from which Egypt has increasingly suffered since important meetings recently held between the government, the CBE international course of events or on world the Arab Spring uprising in January 2011. The consequent political and representatives of the industrial sector with the objective of getting issues. The AL failed to give the Arab and economic turmoil drove away tourists and foreign investors; the the production wheel to roll again to provide the needs of the local World a stature that matches its human, foreign currency reserves dropped from a pre-Arab Spring USD36 market and thus save on imports, and to promote exports. economic and geographic heft; Arabs billion to USD17.5 billion till July 2016 when it took another plunge are no active doers on the global scene to USD15.5 billion on account of recent payment of some of Egypt’s Possible devaluation but merely respond to or retaliate against debts. This drove the CBE to ration dollars, giving priority to imports The huge fluctuation in the value of the Egyptian pound took place international actions. of essential goods and to exporters who need to import raw material in the wake of talk by CBE Governor Tarek Amer that was taken by Egypt’s keenness to lead the AL comes for manufacturing. the media to hint at a possible devaluation of the EGP. It cannot be said as no surprise, given the country’s for certain whether or not Mr Amer’s remark led to the unprecedented prominent regional stature on the Investment fluctuation, but it did raise questions about the possibility and potential scale of human resources and political The fact that Egypt is currently holding talks with the IMF for a benefit of future devaluation or of floating the pound. and military heft, even if not on the USD12 billion, three-year lending programme has given rise to increase the economic burdens on mainstream Egyptians. Ahmed Shiha, head of the Importers Division of the Cairo economic or trade fronts; also given hope that the country is on its way out of the economic doldrums. The current exchange rate crisis, the ECES points out, is the Chamber of Commerce, says that devaluation of the pound will not that Egypt has endorsed the AL since its Premier Sherif Ismail pointed to the importance of cooperating with outcome of a number of factors on the fiscal and economic levels, all be as beneficial as some claim. It will not boost Egyptian exports, inception. Yet what did Egypt achieve the IMF in order to promote international confidence in the economy, of which ultimately lead to an inability of the economy to provide since more than 50 per cent of the inputs needed for manufacture are so far towards initiating a unified Arab thus attracting foreign investments and reaching fiscal stability. foreign currency resources. Since 2011 there has been a decline in themselves imported. Devaluation would thus only serve to increase entity? Was Egypt able to lead the Arabs The Egyptian public, however, still fears other rounds of EGP/USD tourism, foreign direct investments and exports. Local production prices and raise inflation rates. “Devaluing the Egyptian pound will along the path of Arab union same as the exchange rate swings, and wonders whether or not the success of the plunged, forcing the State to increase its imports to compensate for lead to more Egyptian pounds being required to pay for imports, Europeans did to establish the European IMF talks will ultimately stabilise that rate. More importantly, will it the lack of locally-produced goods. which would automatically raise prices and cause a rise in the USD/ Union? The answer is ‘No’ with all the stabilise the spiralling prices that are now the scourge of Egyptians? EGP exchange rate.” frustration and letdown this ‘No’ carries. According to the Egyptian Centre for Economic Studies (ECES), the Speculation and jihadi-sponsored activity According to Mr Sharif, the CBE Governor’s statement was taken I advise you to read two interviews IMF loan will reduce Egypt’s demand on external funding, estimated Economy expert Mukhtar al-Sharif told Watani that once Egypt out of context; Mr Amer, he explains, was talking about flexibility recently published by the Cairo State- at USD25 billion for the coming year. signs the agreement with the IMF, USD2 billion will enter the in dealing with the Egyptian pound, which was taken instead to owned daily Al-Ahram, with Mr Arabi The ECES stresses that the IMF loan, or any foreign loan for that Egyptian treasury, thus increasing the supply of US dollars.
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