Tuesday, March 29, 2016

Looking for stability

In the wake of the 25 January Revolution in 2011, the Egyptian economy witnessed significant deterioration because of the security and political turbulence that followed. This led to a reduction in various sources of foreign currency, particularly in the tourism sector and foreign investment.
Fortunately, the Central Bank of Egypt (CBE) had around $36 billion in its reserves that it used to defend the pound, pouring more than $40 billion over five years from the reserves and Gulf support into the market.
Last year, the pressure on the pound mounted with the retreat of Gulf aid. In addition, the crash of the Russian plane in Sinai in November was more than enough to kill the tourism sector. The promises of the Egypt Economic Conference held early last year in Sharm El-Sheikh did not materialize, and the result was more currency speculation
Despite several devaluation rounds last year and the CBE’s imposition of a ceiling on foreign currency deposits, as well as efforts to rationalize imports, the speculation intensified, and the gap between the official and black market rates for the dollar widened.
After a very stormy year, the leadership of the CBE changed. The first few weeks marked a shift in strategy, with the deployment of a wider set of monetary tools to defend the pound. The CBE pushed the large national banks to issue high-interest certificates of deposit (CDs) in pounds to increase demand for the pound. In coordination with the government, new rules for imports were issued, aimed at decreasing unnecessary imports and reducing pressure on the pound.
At the end of February, the CBE governor gave a televised interview highlighting his views about the pound and the economy. He made it clear that floating the pound was not on the horizon and that the CBE has solid plans to defend it. Despite the release of information that the Ministry of Finance is forecasting the exchange rate for the next fiscal year at LE 8.25 against the dollar, the CBE governor said that this is not accurate.
However, despite the reassurances the black market fired up in early March when the unofficial rate increased from around LE 8.80 to LE 9.85, with a two-pound difference between the black market and the official rate, which stood at LE 7.83. For a few days, people were running to buy dollars to protect their savings.
The CBE realized that a serious run on the currency was underway and acted quickly by removing the ceiling on foreign-currency deposits at the banks and pushing the big national banks to issue high-interest dollar certificates of deposit. The market then cooled down and the unofficial rate fell from around LE9.85 to LE 9.10 in a shock to individual speculators.
High hopes were put on Egyptians living abroad, and new dollar-denominated certificates of deposit were launched for them at rewarding rates. However, the results were disappointing, and the CBE was left in a tough situation with the retreat of its various sources of foreign currency.
It had to resort to portfolio investors. Those invested more than $10 billion in Egyptian government debt in 2010, but such investments then reduced to almost nothing. The funds of portfolio investors move very fast, which is why they are called “hot money”. Such investors require a flexible exchange-rate system that allows easy entry and exit, and they want to see the pound at its real market value. Devaluation thus became necessary to lure these investors.
In a bold move, the CBE devalued the pound by 14 per cent earlier this year as the dollar reached LE8.95. In addition, the large national banks offered options to hedge against a future devaluation and to secure foreign financial institutions investing in the country. The devaluation was a major move that most investment banks cheered on and the stock market rallied. Soon afterwards, the CBE appreciated the pound by a few cents in order to give the impression of a flexible exchange-rate system.
In parallel, the CBE tried to contain the black market by having the large national banks issue high-interest dollar CDs to push savers into putting their dollars in the banks. The banks also issued pound CDs at 15 per cent interest rates for individuals to encourage them to give away their dollars.
The CBE held exceptional auctions after the devaluation of around $2 billion, these being large enough to give the signal of dollar liquidity in the system. But the black market did not disappear as it was hoped that it might, and it even got fired up again, trading at a 10 per cent premium above the official rate at the time of writing this article.
Given that the decision to devalue went against earlier reassurances, the market has lost trust in what the CBE is saying and individual speculators see a new devaluation coming. While investment funds have welcomed the move, they expect a further devaluation and believe that 9.5 to 10 per cent would be a reasonable range.
Moreover, they want to see a more flexible exchange-rate system. Portfolio investors will probably follow a “wait and see” strategy before they come into line. They would like first to see the pound reach bottom and the CBE commit to flexibility. They also want to assess the reliability of the new hedging options.
The markets have been wondering where the CBE has been getting its dollars from in the meantime. Rumors have spread that billions of dollars have been committed by portfolio investors, but in reality the CBE has been recycling dollars within the banking system. If it had been receiving funds, it would have announced them.
Dollars are being recycled in both directions, as was implicitly announced by the CBE. The CBE holds an auction giving money to the banks, and then it borrows the dollars back from them or asks them to issue dollar-denominated CDs to collect dollars and then borrows dollars from the banks and uses them to enhance its reserves.
Recycling dollars can buy time but it creates a bigger problem later on and results in serious systemic risks in the banking system. Globally, central banks issue forward guidance to manage market expectations and remove erratic volatility, but in the Egyptian case things are in total darkness.
A case to remember is South Korea during the Asian Crisis at the end of the 1990s. Its central bank tended to overstate its reserves, and when the reality was known it caused a huge crisis. Analysts also refer to the experience of the CBE in 2003 when it devalued the pound and paved the way for large inflows of foreign investment, yet the political and security situation now is different from what it was then.
In addition, the intervening global economic slowdown has affected the flows of funds to emerging markets, which witnessed net capital outflows in 2014. These even increased in 2015, making it very hard to assume that Egypt will be an exception to other emerging markets amid such turbulence. Even if a couple of billion dollars are invested by portfolio investors, this is far too little to save the pound.
On the other hand, the cost of the devaluation will be hefty, and prices will shoot up. Despite the high unofficial rate on the black market, basic goods are handled through the banks at the official rate, while luxury goods go through the black market. Customs duties are based on the official rate, and thus will increase as well. As a result, basic goods will increase in price after the devaluation, and these are mostly bought by poor and middle-income people. The coming inflationary wave will result in the further erosion of their already limited purchasing power.
The devaluation will also cause a huge increase in the budget deficit as subsidies will increase by up to LE 30 billion. Debt servicing will also increase by the same amount due to an increase in interest rates by the CBE to curb inflation and increase demand for the pound. The result of the devaluation will thus be an increase in the budget deficit of around LE 50 billion, or equivalent to a two per cent increase in the budget deficit, killing the efforts made by the government to contain the deficit in the near future.
The bottom line is that the CBE is in a tough situation, but that it is taking a gamble by recycling dollars within the banking system to show liquidity. It has taken major measures to attract hot money, which probably will not come in quickly putting the CBE in an even tougher situation.
It has tried to gain the trust of the financial institutions, while it has lost the trust of individuals who are speculating further on the currency instead of building on the containment of the black market a few weeks ago. The results will be more pressure on the pound in the short term and probably another devaluation. In the meantime, the budget deficit and inflation will increase, exacerbating current social pressures
Omar El-Shenety
29 March 2016 
This article was published in "Al Ahram Online"

Friday, March 18, 2016

المصريون بالخارج.. الكنز المفقود

المصريين بالخارج هم مجموعة سافرت للعمل خارج مصر رغبة فى الحصول على فرصة عمل أو حياة أفضل. وعلى الرغم من أن الكثير منهم قد يلجأون لدفع الأموال للحصول على فرصة جيدة فى الخارج إلا أنه ما إذا استقر الأمر لهم، فإن فرصهم فى الحصول على دخل أكبر من متوسط الدخل فى مصر تكون عالية، وهو ما ينعكس على قيامهم بتحويلات دورية لعائلاتهم فى مصر لإعانتهم أو لادخار المال واستخدامه لشراء أصول عقارية. ولعل السفر للخارج خاصة للخليج كان لفترة المصدر الرئيسى للترقى الاقتصادى فى الطبقات الفقيرة والمتوسطة.

يتم تسليط الضوء أخيرا على المصريين بالخارج على أنهم أحد أهم الحلول لمشاكل مصر الاقتصادية خاصة مشكلة الدولار. وبناء على الإحصاءات الرسمية، فإن قرابة ٣٫٥ مليون مصرى يقيمون بالخارج لكن العديد من التقارير تشير إلى أن الرقم الحقيقى قد يصل إلى ٨ مليون مصرى حيث أن جزءا كبيرا من المصريين بالخارج لا يقومون بتسجيل أنفسهم فى السفارات خوفا من فرض ضرائب عليهم كما أن بعضهم قد يكون قد سافر بطرق غير شرعية. ويقيم الجزء الأكبر من المصريين بالخارج فى الدول العربية خاصة منطقة الخليج. وعلى عكس الصورة الذهنية فإن غالبيتهم سبق لهم الالتحاق بالتعليم، وأكثر من نصفهم أنهوا مرحلة التعليم الثانوى.

وتعتبر التحويلات الجانب الاقتصادى الأهم للعاملين بالخارج حيث تمثل مصدرا رئيسيا للعملة الصعبة الواردة للاقتصاد. وتشير الأرقام إلى أن التحويلات زادت من ٢٫٦ مليار دولار فى ١٩٩٠ لتصل إلى ٤٫٣ مليار دولار فى ٢٠٠٥ بمعدل زيادة سنوى يقارب ٥٪. لكن فترة ٢٠٠٥ــ٢٠١٠ شهدت نموا كبيرا بلغ فى المتوسط ١٨٪ سنويا لتصل إجمالى التحويلات لقرابة ١٠ مليارات دولار فى ٢٠١٠ مدفوعة بنمو كبير فى اقتصادات دول الخليج وليبيا على خلفية أسعار البترول المرتفعة. أما بعد الثورة، فقد شهدت التحويلات ارتفاعا غير مسبوق حيث وصل متوسط النمو السنوى فى التحويلات لقرابة ٤٠٪ فى عامى ٢٠١١ــ٢٠١٢ لتصل اجمالى التحويلات لقرابة ١٨ مليار دولار.

ولعل السبب فى تلك الزيادة الكبيرة يرجع للحالة الإيجابية التى سادت المجال العام عقب الثورة مباشرة والتصور السائد آنذاك أن مرحلة جديدة فى عمر الوطن قد بدأت وأن تلك المرحلة سيصاحبها نمو اقتصادى كبير. لكن تلك الطموحات العريضة سرعان ما اصطدمت بالواقع الحرج على المستوى السياسى والأمنى والذى انعكس سلبا على التراجع الاقتصادى خاصة تراجع مصادر الدولار المستدامة، وعلى رأسها السياحة والاستثمار الأجنبى مما زاد الضغط على الجنيه وأدى إلى عدة موجات من اشتعال السوق الموازية للعملة. عدم الاستقرار والصورة السلبية انعكس بشكل واضح على التحويلات والتى سجلت معدل نمو متواضع خلال السنوات الثلاث الأخيرة وصل ٢٫٦٪ فقط لتصل إجمالى التحويلات لقرابة ١٩ مليار دولار فى العام الماضى.

على صعيد آخر، فإن تراجع أسعار البترول بشكل كبير أثر على اقتصادات دول الخليج سلبا وبالتبعية على حجم تحويلات المصريين المقيمين فى تلك الدول. كما أن التدهور الكبير الذى شهدته ليبيا قد أدى إلى رجوع عددا ليس بالقليل من المصريين العاملين هناك، وبالتالى انحصار التحويلات القادمة من ليبيا. لكن بجانب تلك الأسباب السياسية والإقليمية، هناك شواهد على أن اشتعال الدولار أخيرا كان سببا وراء عدم نمو تحويلات المصريين بالخارج، حيث يخاف البعض من عدم قدرتهم على سحب تحويلاتهم بالدولار وإجبار البنوك المحلية لهم على تحويل تلك الدولارات للجنيه بالسعر الرسمى.


بناء على مسح شامل أجراه الجهاز المركزى للتعبئة العامة والإحصاء منذ عامين فإن ثلثى العاملين بالخارج يعتمدون على التحويلات البنكية لتحويل الأموال لمصر، أما الثلث الآخر فيكون من خلال الأصدقاء والوكلاء. ولذلك فإن الحجم الحقيقى لتحويلات المصريين بالخارج يفوق الرقم الرسمى بالنصف فى المعتاد، مما يعنى أن الرقم الحقيقى قد يصل إلى ٢٥ــ٣٠ مليار دولار. وتشير تقارير عدة إلى أن اشتعال السوق الموازية تؤدى للجوء نسبة من المصريين بالخارج لمكاتب الصرافة والتى تستلم الأموال منهم وتعد بتسليمها لأقاربهم فى مصر بالدولار. لكن بعض مكاتب الصرافة لا تقوم بتحويلها لمصر من خلال البنوك كما هو متعارف عليه بل تقوم بتسويتها مع أموال تجار آخرين فى مصر يريدون إرسال العملة الصعبة خارج مصر بهدف دفع مستحقات موردين فى وقت يضيق فيه البنك المركزى الخناق على المستوردين.

فى مثل هذا الوضع، المصرى بالخارج يدفع الأموال للصرافة لتحويلها لمصر لكنها لا تدخل للاقتصاد بل تحتفظ بها الصرافة فى الخارج وتعطيها بالنيابة عن التاجر المصرى للمورد فى الخارج. وفى مصر تتسلم الصرافة الدولار من التاجر وتعطيه لعائلة المصرى بالداخل. وبناء على ذلك، فالمصرى بالخارج وكذلك التاجر المحلى كلاهما حقق هدفه لكن فى النهاية لا يدخل للاقتصاد عملة صعبة نتيجة ذلك. وهذا الأمر ليس اكتشافا جديدا، ولعل ذلك ما يفسر قيام الحكومة بإصدار قرارات تنظم عملية الاستيراد تقضى بدفع كامل قيمة الشحنات المستوردة من خلال البنك لإتمام عملية الاستيراد.

المصريون بالخارج يمكن اعتبارهم الكنز المفقود حاليا، حيث إن حجم تحويلاتهم الحقيقى يقارب ٢٥ــ٣٠ مليار دولار سنويا، وهو ما يفوق إجمالى إيرادات السياحة والاستثمار الأجنبى مجتمعين. ولذلك يركز البنك المركزى على المصريين بالخارج مستهدفا زيادة تحويلاتهم وإرسالها من خلال البنوك، وكذلك الحفاظ على أكبر جزء منها داخل القطاع المصرفى لدعم قدرة البنك المركزى على الدفاع عن الجنيه. ولعل ذلك ما يفسر طرح شهادات دولارية أخيرا ذات عائد مرتفع نسبيا تستهدف تلك الشريحة. لكن الشهادات الأخيرة لم تستطع جذب الأموال المطلوبة من المصريين بالخارج نتيجة الاضطراب فى سوق العملة وتوقع المزيد من التخفيض للجنيه.

ومن المتوقع أن يستمر البنك المركزى بالعمل على طرح أدوات استثمارية مختلفة من شهادات دولارية وشهادات خاصة بالجنيه وتسهيل إجراءات التعامل مع الدولار المحول من المصريين بالخارج لبث الثقة لديهم أملاً فى تشجيع تحويلاتهم بالشكل المطلوب لكن ذلك سيتطلب بعض الوقت لإعادة بناء الثقة والمصداقية فى الجنيه والاقتصاد المصرى بشكل عام.

عمر الشنيطى
 18 - مارس - 2016
نُشر هذا المقال فى "جريدة الشروق"

Monday, March 14, 2016

The battle between the Central Bank and the dollar continues

Contrary to what some claimed would happen, the value of the dollar has not dropped. It has continued to climb, as reported on various news websites with sensational headlines such as “Another leap for the dollar” or “The pound continues to bleed.”
These headlines are frightening for readers and deepen the urge to speculate on the black market. At the same time, the Central Bank of Egypt (CBE) continues to reiterate that it has the ability to provide needed dollars to import basic commodities, and that shortages in foreign currencies only impact luxury items, which some describe as “provocative goods.”
But in reality, there are shortages in many basic goods, including medicine, which is why the CBE recently directed funds to import the same. While the CBE declared there is no plan in the near future to slash the value of the pound, there is news that the average dollar exchange rate in the budget of the next fiscal year starting in July is EGP 8.25.
Combining the climb in the black market and expectations that the value of the pound will drop in the next fiscal year, it is only natural to expect the value of the Egyptian pound to fall. The gap between the official rate and the black market rate is more than 15 per cent, which is huge, and the CBE must contain this gap.
However, analysts believe matters will get out of control and the CBE will succumb to pressure and float the pound. This would mean leaving the market to decide the exchange rate, resulting in big leaps in the exchange rate of the dollar at the beginning of any such process.
Some analysts believe that pressure on the Egyptian pound is much greater than the capabilities of the CBE, but monitors of CBE policies and moves understand that it still has many options. Among the many tools the CBE retains to defend the Egyptian pound and prevent its collapse on the market, six key tools can be highlighted, varying in importance, impact and reliability.
First, borrowing from international financial institutions to provide hard currency and earning certificates of confidence, most notably from the World Bank, which recently agreed to fund Egypt with $3 billion, and the African Development Bank and European development banks that funded various developmental projects.
Borrowing from international institutions will not provide large sums of hard currency because these institutions have conditions that may be difficult to meet or that exclude certain governments projects. For example, the World Bank refused to fund the reclamation of 1.5 million feddans. What is certain is that these loans grant the economy a certificate of confidence that helps attract direct investment or the purchase of investment certificates and dollar bonds.
Second, resorting to Gulf funding, which decreased last year after generous support since mid-2013 because of a drop in the price of oil and budget deficits in Gulf countries. Nonetheless, even after it decreased, Gulf assistance is a vital tool in the hands of the state, especially in times of crisis. Receiving a small portion now of what Egypt had received in the past could assist the CBE in saving the pound if black markets become overactive. However, Gulf assistance is also conditional and these requisites may be of a military nature.
Third, raising the interest rate, either by the CBE for loans to banks or the interest rate of pound-denominated certificates in state-owned banks, to attract depositors to convert their savings from dollars to pounds, and buy high interest certificates in pounds. The CBE took this step in the past and is expected to do so several more times to increase the difference between interest on the pound and dollar returns, and hence ease the pressure on the pound. However, this measure may not have much of a general impact and requires creating new and innovative investment vehicles.
Fourth, undermining foreign exchange companies by shutting some down and rescinding their licenses. This excessive measure would scare the parallel market from over-speculating on the dollar, although it always results in the opposite because it sends a message that the CBE is unable to keep up with the black market and thus needed to shut down exchange companies. This would increase dollar speculation instead of containing the parallel market. It would be wise if the CBE reconsiders such an approach.
Fifth, establishing obstacles to imports through new measures regulating imports, including increasing tariffs by the Ministry of Trade and Industry, or providing hard currency that is controlled by the CBE, thus controlling import operations and cutting down on imports it does not see as necessary. This negatively impacts the availability of many imported goods on the market, and not just luxury goods. Nonetheless, this is the fastest tool to reduce the import bill, which is a major cause for hard currency leaving the economy.
Sixth, issuing dollar investment certificates for Egyptians living overseas to increase the economy’s dollar revenues in return for attractive interest rates on these certificates. The state had resorted to such certificates in 2012, and succeeded in selling them. The state intends on issuing similar certificates once again, to collect a new reserve of dollars.
Despite increasing pressure on the pound and a spiraling parallel market, the CBE still has many tools to prevent the collapse of the Egyptian pound and this has become evident in the last few days.
All these tools can defend the pound and prevent its devaluation for some time, but not for long. These tools will be beneficial and extraordinary measures to buy some time until political and security stability is re-established, which is the real obstacle facing economic recovery.

Omar El-Shenety
14 March 2016 
This article was published in "Al Ahram Online"

Friday, March 4, 2016

ولا يزال صراع المركزى مع الدولار مستمرا

تتصاعد أزمة الدولار يوما بعد يوم، بعد أن تخطى سعر صرف الدولار حاجز التسعة جنيهات فى السوق الموازية. ومع كل صباح، يتفاجأ الناس بأن سعر صرف الدولار لم ينخفض كما كان يروج البعض، بل على العكس يواصل ارتفاعه وهو ما ترصده مواقع الأخبار المختلفة بعناوين جذابة مثل: «قفزة أخرى للدولار» أو «استمرار نزيف الجنيه». تلك العناوين مفزعة للقراء وتعمق من الرغبة فى المضاربة مع ارتفاع الدولار المستمر فى السوق الموازية.

فى الوقت ذاته، يؤكد البنك المركزى على قدرته على توفير الدولار اللازم لاستيراد المنتجات الأساسية، وأن التقصير فى تدبير العملة يطال المنتجات الرفاهية، والتى يطلق عليها البعض مسمى «السلع الاستفزازية»، لكن الواقع أن هناك نقصا فى توافر العديد من السلع الأساسية، منها الأدوية وهو ما دفع البنك المركزى أخيرا لتوجيه العملة الصعبة لاستيراد الدواء. وبينما يؤكد البنك المركزى على عدم وجود خطة لتخفيض الجنيه على المدى القصير، يتم تداول أخبار على أن متوسط سعر صرف الدولار فى موازنة العام المالى القادم، الذى يبدأ فى يوليو من المتوقع أن يكون ٨٫٢٥.

ما بين اشتعال السوق الموازية من ناحية وتوقع انخفاض الجنيه فى موازنة العام المالى الجديد من ناحية أخرى، يصبح توقع حدوث تخفيض فى سعر صرف الجنيه أمرا بديهيا، حيث إن الفجوة بين السعر الرسمى والسعر الموازى، أصبحت تزيد عن ١٥٪ وتلك الفجوة الكبيرة سيكون على البنك المركزى العمل على خفضها. لكن بعض المحللين يراهنون على أن الأمور ستخرج عن السيطرة وأن البنك المركزى سيرضخ للضغوط ومن ثم سيقوم بتعويم الجنيه، وهو ما يعنى أن يترك تحديد سعر الصرف للسوق دون تدخل، وهو ما سينتج عنه ارتفاع كبير فى سعر صرف الدولار فى بادئ الأمر.

يرى بعض المحللين أن الضغوط على الجنيه أكبر من قدرة البنك المركزى، لكن الناظر لسياسة البنك المركزى وتحركاته، قد يدرك أن البنك المركزى مازال فى جعبته الكثير، حيث لا يزال لديه أدوات متعددة للدفاع عن الجنيه ومنع انهياره فى السوق. ويمكن فى هذا الصدد التعليق على ست أدوات رئيسية تتفاوت فى أهميتها وأثرها ومدى الاعتماد عليها.

الأولى: الاقتراض من المؤسسات المالية العالمية لتوفير العملة الصعبة واكتساب شهادة ثقة. ويأتى على رأس تلك المؤسسات البنك الدولى الذى وافق على تمويل مصر أخيرا بإجمالى ٣ مليارات دولار وكذلك بنك التنمية الأفريقى والبنوك التنموية الأوروبية التى تمول العديد من المشروعات التنموية المختلفة أخيرا. الاقتراض من المؤسسات الدولية لن يوفر الكثير من العملة الصعبة، لأن تلك المؤسسات لها شروط قد لا يسهل تحقيقها فى كل المشروعات التى تقدمها الحكومة، ولعل الشاهد على ذلك هو عدم موافقة البنك الدولى على تمويل استصلاح ١٫٥ مليون فدان. لكن مما لا شك فيه أن تلك القروض تكسب الاقتصاد شهادة ثقة تساعد فى جذب الاستثمارات سواء المباشرة أو الاستثمارات فى شهادات الاستثمار والسندات الدولارية.

الثانية: اللجوء للدعم الخليجى والذى تناقص فى العام الماضى بعد فترة من الدعم السخى منذ منتصف ٢٠١٣، بسبب تراجع أسعار البترول وعجز موازنات دول الخليج. لكن سيظل الدعم الخليجى حتى مع تراجع حجمه أداة هامة، تستطيع الدولة اللجوء لها خاصة فى وقت الأزمات، حيث إن الحصول الآن على جزء صغير مما حصلت عليه مصر سابقا يستطيع أن يعين البنك المركزى على إنقاذ الجنيه، إذا ما اشتعلت السوق الموازية لكن المساعدات الخليجية ستكون مشروطة، وقد تكون تلك الشروط شروطا عسكرية.

الثالثة: رفع سعر الفائدة سواء من قبل البنك المركزى على الإقراض للبنوك أو سعر الفائدة على شهادات الجنيه من قبل البنوك الحكومية لجذب المودعين، لتحويل مدخراتهم من الدولار للجنيه وشراء الشهادات مرتفعة العائد بالجنيه.

وقد قام البنك المركزى بذلك من قبل، ويتوقع أن يعيد الكرة عدة مرات لزيادة الفجوة بين العائد على الجنيه والدولار وتخفيف الضغط على الجنيه إلا أن ذلك التوجه لا يتوقع أن يكون له أثر كبير ويحتاج للعمل على إيجاد أوعية استثمارية جديدة ومبدعة.

الرابعة: محاربة شركات الصرافة بغلق بعضها وسحب رخصها. وذلك التوجه العنيف يهدف لترهيب السوق الموازية منعا للإفراط فى المضاربة إلا أنه دائما ما يؤدى إلى العكس، حيث يوصل رسالة للسوق، أن البنك المركزى غير قادر على مجاراة السوق الموازية ولذلك لجأ لغلق شركات الصرافة، مما يؤدى إلى زيادة المضاربة على الدولار بدلا من احتواء السوق الموازية، وقد يكون من الحكمة أن يعيد البنك المركزى النظر فى ذلك التوجه.

الخامسة: عوائق الاستيراد المختلفة والتى تم وضعها سواء من خلال إجراءات جديدة للاستيراد أو زيادة الجمارك من قبل وزارة التجارة والصناعة أو عملية تدبير العملة التى يتحكم فيها البنك المركزى، ومن ثم يتحكم فى عمليات الاستيراد ويعمل على تقليص استيراد المنتجات التى لا يراها أساسية. وتلك الأداة تؤثر بشكل سلبى على توافر العديد من السلع المستوردة فى السوق وبالتأكيد ليست فقط السلع الرفاهية، لكن فى حقيقة الأمر تلك الأداة هى الأسرع فى تخفيض فاتورة الاستيراد الذى يعتبر البند الأكبر للعملة الصعبة الخارجة من الاقتصاد.

السادسة: إصدار شهادات استثمار دولارية للمصرين بالخارج لزيادة الوارد للاقتصاد من الدولار مقابل عرض عائد مجزٍ على تلك الشهادات، وكانت الدولة قد لجأت لإصدار مثل هذه الشهادات فى ٢٠١٢، ونجحت فى تغطية الطرح آنذاك، وتنوى الدولة طرح مثل هذه الشهادات مرة أخرى، حيث من المتوقع أن تجمع حصيلة دولارية جيدة.

على الرغم من تصاعد الضغوط على الجنيه واشتعال السوق الموازنة، إلا أن البنك المركزى ما يزال لديه العديد من الأدوات التى يستطيع اللجوء لها لمنع انهيار الجنيه. تلك الأدوات مجتمعة تستطيع أن تدافع عن الجنيه وتمنع انهياره لفترة، لكن تلك الفترة لن تطول وستظل تلك الأدوات مفيدة كإجراءات استثنائية، تستطيع شراء بعض الوقت حتى يستقر الوضع السياسى والأمنى والذى يشكل العائق الحقيقى أمام التعافى الاقتصادى.

عمر الشنيطى
 4 - مارس - 2016
نُشر هذا المقال فى "جريدة الشروق"

Thursday, March 3, 2016

Loans are preconditioned, no shame in this

It was recently announced that Egypt would receive a loan from the World Bank amounting to $3 billion, a third of which has already been delivered.
Another loan will reportedly be provided by the African Development Bank. These agreements appear to be a certificate of confidence in the Egyptian economy’s robustness and the credibility of the government's economic reform program.
The government asserted that there are no preconditions from the World Bank side, but soon the bank itself revealed the main conditions for the loan. The international institution, its advice and loans, will be a main part of the economy’s pillars in the coming phase, so it is important to get to know the nature of the conditions.
The aim of this article is not to praise the economic reform program, attack it, or to oppose the World Bank loan or encourage it, but to clarify its mechanisms.
If a country wants to receive funding from an international institution, it requests the help of a consultative team in order to draw up an economic reform program. Usually, the World Bank’s advisory team is the one asked for technical support for two reasons.
First, the experience that the team has accumulated through many of economic reform experiences supervised by the World Bank around the world, whether successes or failures.
Second, the participation of the World Bank’s advisory team in drawing up the economic reform programme makes it axiomatic that the country receives the loan from the World Bank in the end.
According to the submitted final plan, the team responsible for funding is to examine the financial plan. It also inserts some conditions in order to ensure the commitment of the country requesting the funding to the submitted financial plan. 
In addition, the World Bank’s participation in drawing up the economic reform plan gives it much credibility among other international institutions and facilitates like funding.
The World Bank during the last three years offered a lot of technical support for the reform program. With the beginning of the second interim phase in mid-2013, it was evident that the economy was in need of an integrated reform program, which was laid down by the government with the help of the World Bank’s expertise and several other international institutions in order to achieve three main objectives.
First, decreasing the rising budget deficit. Second, the provision of sustainable sources of energy. Third, improving the environment for investment.
During the past two years, the government worked on the implementation of that program through decreasing energy subsidies, setting the future wages cuts item via the Civil Service Law, which parliament opposed, the issuance of the Investment Law, and holding a big economic conference last year.
Despite the World Bank’s participation in laying down the economic reform program, which some view as reform based while others saw as austere, the government embarked on its implementation. However, Egypt didn’t resort to borrowing from the World Bank aside from recently. 
This followed the retreat of generous Arab Gulf financial support, which flowed to Egypt since the middle of 2013 until the beginning of 2015, filling the funding gap and Egypt’s needs for dollars.
However, during 2015, the situation changed because oil prices declined. Thus, the capacity of Gulf countries to support the Egyptian economy decreased and tourism revenues declined after the Russian plane crash in Sinai.
Moreover, the gap between imports and exports has widened at a time when the value of the Egyptian pound became high in comparison with several foreign currencies, while foreign investments didn’t flow as was expected. This was due to political and security turmoil on the one hand, and signs of a new world economic crisis on the other. This led to a big financing gap for the government and great pressure on the Egyptian pound. Consequently, the government sought financing via international institutions.
The economic reform program that the government submitted to the World Bank was not on the spur of the moment. The government, indeed, had begun to implement it since 2014. 
However, in the previous phase, the government relied heavily on Gulf support that was not conditioned on direct economic reform, but undeniably came with heavy political costs that Egypt will continue to pay for some time.
Now, after the decline of Gulf support and the beginning of the financing stage from international institutions, the institutions have enough wisdom themselves to set conditions. The conditions make Egypt committed, as is the case of any country borrowing, to implement economic reforms submitted in its plan to ensure the sustainability of the financial situation and the ability of the economy to repay debts that will be due later.
The economic reform program is not new and the World Bank’s conditions imposed on the Egyptian government, forcing it to implement the measures it submitted in its plan, are not strange. This is the way things are done if a country wants to receive loans.
Naturally, this does not mean that the economic reform program that the government has set is the best. On the contrary, there are lots of question marks, especially regarding the social consequences for such measures that will lead to a rise of prices to a great extent. This was actually observed and recorded by official statistics.
Perhaps the government’s move months ago towards launching initiatives to decrease prices in cooperation with the Ministry of Supply and sovereign entities is the best evidence of the inflationary effect of those policies that negatively affect society, along with social protection programs launched in a precautionary manner. But in reality the negative effect of those policies is much greater.
International financial institutions now play a large role in the Egyptian economic scene after the decline of Gulf support. We now receive big loans that may grant us a certificate of confidence and contribute to solving the dollar crisis, but society will endure a significant social cost due to the conditioned economic reforms. 
The next generations will be obliged to repay those loans. Thus, such matters must be taken seriously.
The relationship between the World Bank and Egypt should not be viewed as a submissive relationship, for there is a mutual interest between the World Bank and Egypt. At the same time, it is illogical to deny the existence of conditions for the loans.
Those conditions must be declared and presented before society for discussion before they are approved by the House of Representatives, while putting into consideration the social and political consequences of the critical reforms.

Omar El-Shenety
3 March 2016 
This article was published in "Al Ahram Online"