عام على قرض صندوق النقد

مر عام على اتفاق مصر مع صندوق النقد الدولى والذى حصلت مصر بمقتضاه على ١٢ مليار دولار بالإضافة لشهادة ثقة تدعم برنامج الإصلاح الاقتصادى الطموح المبنى على تنفيذ سياسات غير شعبية والتى تم الإعلان عنها خلال العام الماضى على موجات مع كل شريحة جديدة يصرفها الصندوق لمصر.

من المفيد العودة بالذاكرة لما قبل نوفمبر ٢٠١٦ حيث كان الاقتصاد يعانى من أزمة حقيقية فى سوق الصرف وكان هناك نشاط غير طبيعى فى السوق الموازية مستفيدة من المضاربة على سعر صرف الدولار. الاضطراب فى سعر الصرف وما تبعه من فقدان الثقة فى الجنيه كان ليدخلنا فى مرحلة انصهار للعملة وهو ما يعنى انخفاضا كبيرا فى سعر صرف الجنيه قد يصل بالدولار لمستويات خيالية أضعاف ما عليه المستوى الحالى. ولعل الذعر من الوصول لتلك المرحلة ونضوب الاستثمارات الأجنبية وما لحقها من معدلات نمو بطيئة ومعدلات تضخم أعلى من المتوسط هو ما جعل من الضرورى اللجوء لصندوق النقد الذى يعتبر الملاذ الأخير.

ولكن ذلك الملاذ الأخير لا يقرض من يأتى إليه بغير شروط. فقامت الحكومة بوضع برنامج إصلاح اقتصادى صدق عليه صندوق النقد واعتبره أحد أركان اتفاقية التمويل حيث يشمل أربعة محاور رئيسية. الأول: خفض النفقات برفع الدعم عن المحروقات والعديد من الخدمات العامة وتقليص الزيادة فى الرواتب والاستثمارات الحكومية. الثانى: زيادة الإيرادات بفرض ضريبة القيمة المضافة. ثالثا: تحرير سعر الصرف للقضاء على السوق الموازية. رابعا: خصخصة بعض الشركات الحكومية ببيعها لمستثمرين أجانب أو طرحها فى البورصة. وبعد عام على القرض، يمكننا تقييم تلك التجربة من ستة جوانب أساسية:
الأول: سعر صرف العملة: شهد العام الماضى زيادة كبيرة فى التدفقات الواردة من العملة الصعبة سواء من خلال قرض الصندوق أو قرض البنك الدولى أو السندات الدولارية التى طرحتها مصر فى أوروبا أو استثمار الأجانب فى السندات الحكومية الذى تخطى ١٨ مليار دولار مما رفع الاحتياطى لأكثر من ٣٦ مليار دولار وساعد على اختفاء السوق الموازية. لكن لا يمكننا أن نغض الطرف عن التفاوت الكبير بين سعر الصرف الحالى وبين ما كان متوقعا قبل التعويم بسبب صدمة السوق بدون سيولة كافية وبدون إغلاق الخطوط الائتمانية المفتوحة بالدولار.

الثانى: الميزان التجارى: تراجعت الواردات خلال العام الماضى بينما زادت الصادرات على أثر تعويم الجنيه مما أدى لانخفاض عجز الميزان التجارى وهو مؤشر جيد وأساسى للتقييم.

ثالثا: التضخم: ارتفعت الأسعار بشكل غير مسبوق مدفوعة بتعويم الجنيه وزيادة الجمارك وضريبة القيمة المضافة ورفع الدعم ورفع أسعار الخدمات العامة فى فترة قصيرة حتى وصل معدل التضخم لقرابة ٣٥٪ بينما كان المتوقع ألا يتخطى ٢٠٪.

رابعا: النمو: شهد الاقتصاد معدلات نمو متواضعة تقارب ٤٪ سنويا مقارنة بما يزيد على ٥٪ فى توقعات ما قبل القرض بسبب بطء تدفق الاستثمارات الأجنبية المباشرة وتآكل القوة الشرائية نتيجة التضخم الكبير وتراجع معدلات الاستثمار الحكومى وتباطؤ استثمار القطاع الخاص بعد رفع سعر الفائدة الكبير.

خامسا: عجز الموازنة: تراجع عجز الموازنة نسبيا بعد خفض النفقات وزيادة الإيرادات. وعلى الرغم من أن العجز مازال قرابة ١٠٪ إلا أن اتجاهه للانخفاض يعتبر مؤشرا جيدا.

سادسا: عبء الديون: اعتمدت الحكومة على الاقتراض بكثافة لتمويل عجز الموازنة مما دفع الدين المحلى لتخطى حاجز ٣ تريليون جنيه لكنه لا يزال أقل من الناتج المحلى الذى زاد بشدة بسبب التضخم الرهيب. كما ارتفعت الديون الخارجية لتقارب ٨٠ مليار دولار متخطية ٤٠٪ من الناتج المحلى بعدما كانت دون ٢٠٪ وهى معدلات ارتفاع مخيفة.

النظر للجوانب السابقة يوضح تباين آثار قرض الصندوق. فعلى مستوى الاقتصاد الكلى، تمت السيطرة على السوق الموازية، والميزان التجارى فى تراجع، والاستثمارات الأجنبية تتدفق بقوة حتى لو فى صورة قروض، وعجز الموازنة يتم السيطرة عليه وصندوق النقد يجدد ثقته فى الاقتصاد مع صرف كل شريحة بينما الأثر الاجتماعى وإن كان كبيرا، ففى النهاية لم يخرج الناس للشوارع. لكن على مستوى الأفراد والشركات، فالوضع مختلف حيث إن التضخم الرهيب أدى لتآكل القوة الشرائية للعائلات بينما لم ينتعش الاقتصاد ولم تزداد الرواتب وفرص العمل بشكل يعوض تلك الارتفاعات. ولعل تآكل القوة الشرائية التى تزامنت مع ارتفاع الفائدة كان لها أثر سلبى على الشركات بالإضافة لتأثر بعضها بالتعويم وما تبعه من خسائر مما أدى لتراجع معدلات النمو والأرباح فى تلك الشركات.

الفجوة بين مؤشرات الاقتصاد الكلى وأداء الاقتصاد الحقيقى على مستوى الأفراد والشركات ليست جديدة على برامج الإصلاح الاقتصادى، وهنا يأتى دور السياسات القطاعية الوسيطة لسد الفجوة بين التوجهات الكلية والاقتصاد الحقيقى الذى يلمسه الناس حيث تعمل تلك السياسات على تحفيز قطاعات لمصر فيها ميزة تنافسية سواء فى مجال تصدير السلع أو الخدمات لإحداث نمو مستدام يستطيع توفير عملة صعبة بشكل دائم وليس اعتمادا على الاقتراض الخارجى. فمن الجدير بالذكر أن الصادرات الزراعية زادت ١٤٪ فقط بينما انخفض الجنيه ٥٠٪ وذلك يوضح عدم مرونة الصادرات المصرية وهو ما يحتاج كغيره من القطاعات العمل على زيادة التنافسية للاستفادة من إجراءات الإصلاح الاقتصادى الحرجة. قد لا يتسع المجال فى هذا المقال للحديث باستفاضة عن السياسات القطاعية لكن المهم إدراك أن غيابها يسبب فجوة كبيرة بين الإجراءات الكلية وبين ما يعيشه الناس.

الخلاصة أنه بعد مرور عام على قرض صندوق النقد، تم القضاء على السوق الموازية وبدأ الميزان التجارى وعجز الموازنة فى التحسن، لكن ذلك جاء على حساب تضخم غير مسبوق ونمو متواضع مصحوبا بمعدلات اقتراض خيالية. ويمكن القول إن الاقتصاد يقف على مفترق طرق، فالعام القادم سيمر بهدوء إلى حد كبير بإجراءات قليلة وتضخم أقل وربما نمو أفضل من العام الحالى لكن بعد ذلك سيكون علينا تسديد الكثير من الديون الخارجية والتى بدون نمو فعال ومصادر مستدامة للعملة الصعبة، فإن الاقتصاد سيكون فى مأزق كبير. ويبقى«تنشيط الاقتصاد الحقيقى» باب الخروج من الأزمة وتبقى «السياسات القطاعية» المفتاح لذلك.

عمر الشنيطي

01 نوفمبر 2017

نشر هذا المقال في جريدة الشروق

Are the reforms paying back?

Egypt launched a long-awaited economic reform programme last November as part of its deal with the International Monetary Fund (IMF) that has provided funds critical to preventing the pound’s meltdown as well as opening the door for foreign funds to flow back into the country.

The aggressive reform programme has covered the removal of subsidies, especially energy subsidies, considered one of the taboos for Egyptian economic policy-making since 1977 even though energy prices were raised in summer 2014. With the signing of the IMF deal last November, the pound was floated and energy prices increased leading to an unprecedented inflationary wave in which official inflation exceeded 30 per cent during the first few months of 2017.

After seven months of the deal, the government resorted to increasing energy prices again, but this time the increase was bigger than expected. Though it was an expected move, people were shocked by its size, and so they ought to have been. First, the rate of increase in gasoline 92 petrol prices has been more than 40 per cent, which puts huge pressure on households. Second, diesel prices have increased by more than 50 per cent, which is a major challenge since diesel serves as a basic energy source for the transportation of goods. Such a huge price increase will impact on the prices of nearly all other goods, even basic goods such as vegetables and fruit whose transportation costs are a significant part of their overall cost.

Third, one day ahead of the rise in prices, the minister of petroleum assured people that there would be no forthcoming rise only for people to be shocked the following day by the new prices. Fourth, it has been announced that electricity prices will also increase in a few weeks’ time, something which will increase the burden on households further and further erode their purchasing power.

The scale and timing of the rises were shocking, yet there are reasons that may explain why the government acted as it did. First, the unexpected spike in the dollar exchange rate from LE8.88 to LE18 doubled the energy subsidies bill. Second, oil prices increased from around $43 per barrel in 2015-2016 to around $48 in 2016-2017, which increased the subsidies bill further and made it critical for the government to push for large cuts. Third, the government needed to contain the country’s budget deficit, which had got out of control and was estimated optimistically at LE370 billion this fiscal year thanks to the five per cent hike in interest rates made by the Central Bank of Egypt (CBE) in the unrealistic hope of containing inflation.

The above reasons have put the government in a corner and made it important to push for aggressive cuts if it wants to keep its agreement with the IMF and ensure the next tranche of the loan. This is critical to keeping the door open for the external borrowing that has become the main source of foreign currency for the country. Despite the pain, this wave of price rises will not be the last, and a few more can be expected to follow every new tranche of the IMF loan.

From a strategic standpoint, it is important to look at the progress of the reform programme so far from two sides, fiscal and monetary. On the fiscal side, the government has raised energy prices twice, such that prices now are close to double those of last October with estimated savings of around LE55-60 billion, according to official estimates. In addition, the government has applied a new value-added tax (VAT) instead of the old sales tax to widen the tax base and increase tax revenues. This could add around LE25-30 billion to tax revenues, according to official estimates.

The government has also increased electricity prices, and another wave of rises to follow soon could save a total of LE35-40 billion, again according to official estimates. Other moves such as increasing the cost of public transportation will probably not lead to significant savings as increases in energy costs will eat into any savings. As a result, the fiscal reforms could lead to total savings of around LE115-130 billion.

From the monetary side, the CBE has made two critical moves. The first was floating the pound last November, which was expected, according to initial expectations, to raise the exchange rate from LE8.88 per dollar to LE12-14. Yet, the move in fact resulted in an overshoot of the exchange rate that reached LE18 per dollar due to a large uncleared backlog of demand for foreign currency at the banks, lack of foreign currency liquidity in the market after the float, and the delay in the move, all resulting in a big gap between the official and parallel markets.

Doubling the price of the dollar has more than doubled the energy subsidies bill, which would have witnessed an increase of around LE60-65 billion at prevailing oil prices before the last energy price hike. One might claim that the pound will rebound after the full implementation of the programme, which could be the case, though a slight recovery of 10-15 per cent for the pound is more likely than a strong recovery.

The second move made by the CBE was hiking interest rates to contain inflation, though this was very debatable given that the prevailing inflation is supply-driven caused by increasing input costs due to the pound’s devaluation, increasing energy prices, increasing customs rates, the application of VAT, and other things, rather than demand-driven, which is usually caused by a fast-growing economy and which can be contained by hiking interest rates to contain demand.

With LE3 trillion of local debt, every one per cent increase in interest rates will result in a LE25-30 billion increase in the cost of the debt. Thus, the ineffective five per cent increase in rates should result in increasing the cost of the debt by around LE125-150 billion on an annual basis, if it can be sustained. With around half of the outstanding debt being short term and needing to be refinanced soon, the actual increase in the cost of the debt is around LE65-70 billion this fiscal year, assuming the hike in interest rates will not be fully reflected in the cost of the debt immediately.

One might claim that the CBE can decrease interest rates any time it chooses, but this does not seem a reasonable scenario in the medium term as long as the IMF is engaged and would like to see the CBE taking a bold stand against inflation. In all cases, such moves had clear effects in the last fiscal year, and they will have an even bigger effect in the new fiscal year.

Accordingly, the burden on the budget due to monetary moves since the application of the IMF programme and assuming no increase in interest rates or increases in the dollar exchange rate is around LE125-135 billion on an annual basis, while the savings in the budget due to the fiscal austerity programme are around LE115-130 billion, including the upcoming increase in electricity prices and assuming no further increases in international oil prices. As a result, technically we have not really started saving yet, and more aggressive cuts need to be on the way to get the budget under control.

With this in mind, it is critical to question the implications of the monetary policy moves that have put a huge burden on the budget and the coordination between monetary and fiscal policy-making at such a critical time. If the results of the monetary policy moves have been realistically forecast, it would probably have been better not to embark on the reform programme on the basis of such a self-defeating model.

Omar El-Shenety

06 July 2017

This article was published in "Al Ahram Weekly"

How Not to Decrease Inflation

Egypt embarked on an economic reform programme last November as part of its deal with the International Monetary Fund (IMF) to fix its chronic economic problems. With the package of reforms planned, it was expected that the country’s high inflation rate, of around 12 to 15 per cent, would get even higher, with an expectation by the government and the IMF for inflation to reach around 18 to 19 per cent in 2017-2018. To curb such high inflation, the Central Bank of Egypt (CBE) decided to raise interest rates by three per cent, a huge spike to avoid inflation getting out of control.

Despite this pre-emptive move by the CBE, inflation skyrocketed to above 30 per cent in the first quarter of 2017. And despite the huge difference between government and IMF forecasts on the one hand and the actual inflation rate recorded on the other, no one is questioning the validity of these forecasts or working to update them. Instead, the IMF is asking Egypt to raise interest rates once again to fight inflation.

Inflation is one of the key macroeconomic indicators of the economy. It is even the most critical for many people who may not understand or care about economic growth or the unemployment rate if they have a job but do care a lot about inflation. High inflation means large increases in the prices of goods and services, which indicate a decrease in people’s purchasing power. For the layman, it may not matter how much money he makes in nominal terms, but it does matter how many goods and services this amount of money will allow him to take home.

For most people in the economics and finance fields, increasing interest rates is the straightforward solution to high inflation. The assumption is simple. If inflation is high, this means the economy has been growing quickly, investment has been progressing, and demand for goods and services has been high. Thus, interest rates are a good cure as high interest rates will dampen investment, and thus decrease demand, which results in decreasing prices for goods and services, hence helping to curb inflation.

This sounds like an easy solution, but it only works if the inflation is caused by an increase in demand, as in the case above. Inflation can be caused by a growing economy and an increase in demand, what economists call demand-driven inflation, but there could also be other causes disconnected from demand and related to supply, such as an abrupt increase in the prices of goods due to the devaluation of the local currency or a spike in global oil prices or any other external shock. 

In such cases, increasing interest rates will dampen demand, but inflation will not be contained because prices did not increase in the first place due to high demand but rather due to increases in the costs of supply.

The simple lesson is that demand-driven inflation is best cured with interest-rate rises, while supply-driven inflation cannot be cured with interest rates. The experience of other countries facing supply-driven inflation, especially as a result of oil shocks, shows that interest rates are an ineffective tool in such cases, and that this type of inflation should be absorbed by the economy itself. This starts to cope by changing inputs for production, such as resorting to fuel-efficient production and transportation mechanisms to decrease supply costs or local manufacturing and import substitution. 

The difference between the two types of inflation was clearly shown with the huge increase in oil prices over the last decade then their severe decline over the last couple of years. The Western central banks did not change interest rate during these two episodes, simply because the inflation caused by increases in oil prices and then the deflation caused by their severe decline had nothing to do with demand and thus interest rates were not relevant to increasing and declining inflation.

EGYPT’S SITUATION: Looking at the situation in Egypt, the economy grew at around two per cent a year for four years after 2011 and then started to show signs of slow recovery when growth stood at four per cent over the last couple of years. 

During the current fiscal year and most probably over the next couple of years, there have been no signs of major recovery, however. At the present low levels of growth, Egypt is officially in a state of stagnation, and it is very hard to assume that the current high level of inflation is demand-driven.

In essence, the current inflation is clearly supply-driven, being caused by a combination of factors such as last year’s floatation of the pound that more than doubled the cost of imports, the increase in customs duties that increased the cost of imports even further, the restrictions on importing activities that made the availability of imports scarcer and their prices higher, the decrease in energy subsidies that increased local production and transportation costs across the board. 

These factors, as well as the expectation of their continuation in the short to medium terms, are the real reasons behind the inflation, which is clearly supply-driven. They are the direct result of the government’s economic reform programme. The government and the IMF expected a surge in inflation, and so did the CBE which pre-emptively used the typical cure of raising interest rates by three per cent. Yet, this large hike in interest rates had no visible effect on inflation, which exceeded 30 per cent in the last quarter, unprecedented in Egypt’s recent history. Such frustrating results should not have been a surprise, however, because the current high inflation rate is supply-driven, and increasing interest rates is irrelevant to curbing it.

The ineffective hike in interest rates did not go through without collateral damage, however. On the one hand, the cost of borrowing to the private sector by the financial institutions effectively reached 18 to 20 per cent. At such exorbitant interest rates, it is hard for the private sector to borrow and invest, deepening the current stagnation further. The government did not go untouched either. Being the largest borrower from the local banks, every one per cent increase in interest rates simply meant more than a LE20 billion increase in the cost of government debt, and thus the budget deficit suffered by more than LE60 billion at a conservative estimate as a result of the three per cent hike in interest rates.

So, who did benefit? The answer is portfolio investors who represent international funds focused on investing in government bonds. These saw the extremely high interest rates on Egyptian treasury bonds as a very good opportunity to make money, especially after the floating of the currency that eliminated currency risks in the short term. Inflows from portfolio investors are critical to supporting the Egyptian pound, but it is debatable whether the cost paid has been fair and if lower costs could have been paid to achieve the same result.

At this critical time, the IMF is now asking Egypt to work on curbing its inflation, which simply translates into hiking interest rates. It is hard to know whether the IMF directive is an order or a condition for the next tranches of the loan, but it would be hard to expect the CBE to decrease interest rates whatever the case may be, and most likely one or more hikes, even if small ones, will be seen in the coming quarters. 

However, such hikes will be ineffective in curbing inflation because the current high rates of inflation are supply-driven, and higher interest rates will not contain them. Instead, they will have wider collateral damage on government finances and the private sector, thus decreasing the prospects of economic recovery in the medium term.

The insistence on not differentiating between demand-driven and supply-driven inflation and the determination on curing both by raising interest rates is a case in point of the adage which states that “if all you have is a hammer, everything looks like a nail.”

Omar El-Shenety

04 May 2017

This article was published in "Al Ahram Weekly"

Five Myths about the Dollar

After a tough struggle to get the foreign exchange market under control with its huge gap between the official rate and the black market rate for the Egyptian pound, the Central Bank of Egypt (CBE) threw in the towel late last year and resorted to the long-awaited floating of the pound.

This had been widely opposed by many due to its inflationary effects, while it was cheered on by others because of its expectedly positive effects on attracting investment. The critical decision to float the pound was made in early November to satisfy one of the key conditions of the International Monetary Fund (IMF) deal, directly after which the IMF approved a loan to Egypt.

While the economy has been on a rollercoaster of reforms, many people disconnected from economic policy and unaware of its mechanics have been lost as a result and many still are.

The dollar exchange rate officially doubled overnight as a result of the floatation and with it prices skyrocketed. Other reforms have meant ever-increasing prices. While many economists expected the dollar to settle at lower rates than those on the black market after the floatation, the official rate kept on rising, and many had no alternative but to build their own theories because of the lack of a credible explanation.

Some of these theories are far from true, and one should shed light on five key misconceptions. The first one says that dollar fluctuations are part of an overall conspiracy by some people or institutions that benefit from such moves. While this is an easy explanation that is in line with the Egyptian way of interpreting events, there is not much evidence to support it. The study of other countries that have floated their currencies shows that this is usually followed by a transitional period of high volatility as the local currency, having been fixed for years, strives to find its true value in the market.

With every move in the exchange rate, analysts try to offer an explanation, and then only a few days later, after the exchange rate has moved in the opposite direction, they try to offer another explanation, which again does not hold for more than a few days. But what people are missing here is that the last few months, and probably the next few months too, should be considered as a transitional phase in which high volatility is to be expected. Understanding the nature of this phase and embracing this volatility is better than trying to offer unreasonable explanations for erratic movements in the exchange rate.

The second theory says that the dollar exchange rate will continue to go up without hitting a ceiling. For some people, holding dollars is therefore the best investment. They assume that the high gains the dollar has made over the past year will be fully or partially repeated over the coming years amid low foreign investment and struggling tourism.

But though the dollar may further increase in value if the economy does not fundamentally recover, it should not be assumed that there will be continuous increases without a limit. In the end, foreign currency is meant to be used for international trade purposes, and having a currency that loses a quarter or half of its value every year would not allow this international trade to flow. Thus, there is a limit to how much the dollar can increase every year after the floatation of the pound because if its value passes a certain limit import prices will become prohibitive. As a result, demand for dollars will decrease and its exchange rate go down accordingly.

The third theory says that the dollar will eventually go down to LE4. This was obviously a joke made by the CBE governor on a TV show that people picked up on and expected to be true or wanted to be true. While in a free-floating system any rate is possible based on market forces, it is hard to see the dollar at LE4 in the short or even the medium term. In the same way, it is hard to see the dollar worth LE50. 

The fourth theory is that the dollar will reach a fixed price soon. While the recent period has shown us that almost anything may happen, it is hard to believe that after floating the pound the CBE will return to a fixed exchange-rate system. Fluctuations are expected to be contained over the next few months compared to the erratic movements since the floatation. The dollar is expected to reach an indicative price, which will be the average rate of the fluctuations. This figure will change from day to day, and even this indicative price could change from period to period given general macroeconomic developments.

The fifth theory is that prices will stabilise as soon as the dollar stabilises. Though the dollar is expected to stabilise soon around an indicative price with less severe fluctuations, prices are not expected to stabilise, however. Price increases have not only been driven by increases in the value of the dollar, and other key factors have played a role, such as the application of the new value-added tax (VAT), increases in customs duties, indirectly levied barriers to imports, increases in energy prices, and the lag effect of the money printing that has taken place over recent years.

The cumulative effect of all these measures has lain behind the huge spikes in prices. Some of these drivers should stabilise soon, such as the changes in the exchange rate and money printing, but others such as the VAT and energy prices will remain in motion.

As a result, prices are not expected to stabilise with inflation at low levels, though it is expected that in a few months inflation that has skyrocketed above 30 per cent lately will decrease to 20 to 25 per cent with the dollar stabilisation. An exception to this would be fully imported products such as cars or electrical appliances, which have been priced at LE20 to LE25 to the dollar. With the dollar at lower levels, we will see a relative decrease in prices.

Contrary to widespread misconceptions, the dollar will still fluctuate in value, yet these fluctuations will be within a tighter range. Probably around mid-year the dollar is expected to stabilise around an indicative price, perhaps around LE15. It could even witness a decrease in value after Ramadan thanks to the extraordinary flow of dollars from Egyptians living abroad and coming to visit Egypt for the summer.

While dollar fluctuations are expected to be tamed and the exchange rate is expected to stabilise in a few months, inflation will stay with us for a while. We have not yet seen the end of the government’s reforms, and a few more reform waves are likely to follow in the next few years. Having said this, the upcoming inflationary waves are expected to be less severe than the current ones, which were exaggerated by the application of many reforms at the same time.

Looking beyond 2017, it is hard to reach a conclusive view about where the dollar will be heading. There are many variables that will affect the dollar’s value, including security that could affect tourism, international financial market trends and their effect on investment in emerging markets, the local political and economic situation that could affect foreign direct investment, or the revival of local manufacturing to substitute imports, among many others.

From a strategic angle, many macro-economic reforms are already in place. Though they could have been debated for years, they were critical and they have now been made. Yet, even these tough reforms alone are not enough, since many micro-economic policies are even more important to improve local competitiveness, remove barriers to investment, resolve profit repatriation issues, and create a level playing field for the private sector against the government and its related entities.

Without such policies in place, the bitter medicine we have taken will not yield the expected relief, and the dollar problem could become even worse in the medium term.

Omar El-Shenety

24 March 2017

This article was published in "Al Ahram Weekly"