EHDR to launch real estate investment fund with EGP 60m capital    Ahly interim-coach thanks players after Cairo derby win    Evouna's brilliance helps Ahly to Cairo derby win over Zamalek    Weladha Sanadha honors top students in Egypt's schools    Saudi police arrest 3 accused of killing Egyptian citizen in Riyadh    Egyptian policeman sentenced to 8 years for murder, torture    Egyptian FM criticises malignant portrayal of country's human rights record    Minister of Interior ‘incites' violence against ‘condom pranksters': Lawyers    MOI Abdel Ghaffar defends Egyptian security forces    Head of Parliament to review MP's resignation    Prosecution renews detention of 16 MBs in Gharbia    Minister of Education discusses cooperation with U.S Cultural Attache    Six ‘terrorist cells' arrested ahead of 25 January anniversary: Interior Ministry    Ministry of Supply plans FIHC IPO    European Club Association backs Infantino for FIFA job    Committee of archaeologists to examine pieces controlled before being smuggled    Gulf bourses drop, following global shares lower    GM halts Egypt operations due to currency crisis – sources    Local NGOs condemn recent travel bans against political activists    Proverb of the day: The ship that departs is better than the ship that arrives المركب اللى تودى أخير من اللى تجيب    Israel tries to bolster its image via Oscars 'swag bag'    Ousted president Morsi on trial over espionage    AUC to hold roundtable on future of water in Nile basin countries    Russia to deliver equipment for Egypt's Mistral helicopter carriers    EEBC to meet with Egypt's minister of electricity over several issues    Egypt treating Italian student killing 'as if it were an Egyptian'- minister    EGX gains EGP397 billion during opening session    Cisco's quarterly report offers gauge of technology demand    How governments can think unthinkable    UN blasts rampant executions in Syrian detention centres    Egypt, UAE army leaders hold military cooperation talks in Cairo    Russia and Egypt military coordinate efforts in fight against terrorism: Sputnik    David Thorne to visit Egypt to boost economic ties    Trump, Sanders look to emerge from New Hampshire with wins    S.Korea says working with US, Japan on "strong" N.Korea sanctions    The Press Syndicate issued Sunday its first annual report reviewing violations against journalists, with head of the Freedoms Committee Khaled El-Balshy confirming that "more than 50% of violations are committed by the Ministry of Interior".    ElDamaty holds meeting to discuss development of Giza pyramids project    Zamalek fans commemorate victims of Air Defence stadium massacre    Zamalek fans protest to commemorate air defense stadium incident    Police declare that no fans will be allowed to enter Al-Ahly vs Al-Zamalek match    In Pictures: Heliopolis Sea Star Water Polo Festival 2016    Security measures at archaeological areas after pyramids stones sale    Europe's outlook on Egypt's security conditions ‘unchanged' – official    Egypt's parliament votes for investigation into Geneina's corruption claims despite media gag    Al-Ahly changes training ground, police force Ultras out    Egyptian artists to participate in New York Live Ideas festival    It is National Libraries Day!    Three arrested for 'breaking off and selling' pieces of Giza pyramids    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.





Egypt is facing financial crisis, says finance minister
Published in Almasry Alyoum on 26 - 10 - 2011

Egypt is facing a financial crisis that only foreign funding could help alleviate in the short term, Minister of Finance Hazem al-Beblawy said on Tuesday.
“We need liquidity now,” Beblawy said in a press conference at the ministry featuring a panel of experts.
The minister said that Egypt has nearly exhausted its ability to borrow internally, calling into question whether the country's financial institutions were capable of financing the coming period.
“Getting this liquidity from outside [Egypt] would be safer for our budgetary stability,” he said.
At the same event, Andreas Bauer, division chief of the International Monetary Fund's (IMF) Middle East and Central Asia department, displayed a recent report titled “Prospects and Challenges for the Global Economy and the MENA Region.”
According to the report, as 2011 dragged on, the IMF revised its forecasts on growth in MENA oil-importing countries. They predicted that Egypt's growth would be stunted at around 1.5 percent this year and under 2 percent in 2012.
“Despite what we previously thought, 2012 will not be a recovery year,” Bauer said.
“We are approaching a period of many challenges, to put it lightly. It centers around the budget deficit and a general slowdown,” said Ahmed Galal, director of the Economic Research Forum (ERF).
Most indicators have shown that Egypt has been suffering from capital flight and a general reluctance from investors, foreign or domestic, to invest in the country during this phase of political instability. “We are not suffering an economic crisis, we are suffering a financial one,” Beblawy said.
The means of production and the markets in general remain unchanged, but the money to keep them moving is running out fast. Beblawy made a medical analogy – one of many during this conference – that the economy is like a body, the body is fine, but it's running out of blood.
One thing Beblawy agreed upon with Minister for Social Solidarity and Justice Gouda Abdel Khaleq was the need to address financial stability and budgetary issues.
Along with Bauer, both ministers also agreed on the need to address the issue of subsidies. Spending on subsidies in Egypt, according to the IMF, has increased disproportionate to the decrease in the deficit.
Moreover, subsidies have been inadequately targeted. Subsidies, especially petroleum – which represents two-thirds of spending on subsidies – “are a cancer in our budget,” Belblawy said. Petroleum subsidies do not support the consumer, but the producer, he added.
“We have yet to achieve any amount of social justice, which the revolution called for,” said Abdel Khaleq. He pointed to the budgetary issues and the need to create some “financial space” to be able to implement some of his social programs.
While neither directly taking aim at the IMF nor directly addressing the issue of foreign funding, Abdel Khaleq closed with a proverb indicating that Egyptians should be left to solve their own problems without foreign intervention.
A lack of policy
Beblawy and Abdel Khaleq sat on the same dais. Two ministers representing the same government, but unable to indicate any form of cohesion regarding economic, financial, or social policy in the coming period.
Despite Abdel Khaleq's assertions that the current cabinet does not represent a caretaker government, neither he nor Beblawy gave any clue as to what the medium- or long-term vision of this cabinet would be. They did, however, present a wide array of problems facing the economy.
The ministry of finance has a problem with revenue, especially with those evading sales taxes. “The minister of finance does not have control of over 55 percent of the budget,” Beblawy said.
Abdel Khaleq indicated that there is a consensus, even among the business community, for a progressive tax system.
Both ministers and Bauer were in agreement on the need for fiscal stability, and a reassessment of petroleum subsidies in particular, with no indication of how the government is working towards achieving that.
Beblawy all but affirmed his point of view that Egypt is in dire need to foreign funding, without being able to indicate whether or not such a request would be made, or why the Supreme Council of the Armed Forces (SCAF) saw it best to reject that option to begin with.
Hany Qadry, assistant to the minister of finance, told Al-Masry Al-Youm that Egypt is not currently in negotiations with the IMF over a loan, even though it would be able to immediately take a loan of up to US$9 billion, which is three times its deposit in the fund.
“Decisions must be made to stabilize the budget and the economy,” Abdel Khaleq said.
So far, it doesn't seem like there are any well thought out decisions or plans being made by the policy makers. Moreover, many doubt that the current government has much power compared to the ruling military council.


Clic here to read the story from its source.