The big Egypt number that came out yesterday was the balance of payments deficit, which widened to $11.3 billion in 2012/2011, from $9.8 billion a year earlier as two of the country’s biggest currency earners, tourists and foreign investors, fled amid last year’s uprising.
This Central Bank announcement is important because it provides some indication of Egypt’s balance sheet – how much is going in and how much goes out. Obviously if not enough money is coming in to cover expenses, a deficit will occur. That’s why emphasis is being put on exports, tourism and foreign investment with big breakfasts that bring in huge US companies. That’s also why Egypt needs an IMF loan.
Another important currency earner is the Suez Canal, and latest revenues for the canal rose 3% to $446.6 million in August compared to the previous month, Reuters reported.
While Israeli political powers dithered over the state budget for 2013, Palestinians are protesting the dire economic situation.
Tens of thousands of Palestinians in the West Bank yesterday held one-day long strikes as part of weeklong protests, over the deepening economic crisis, the Wall Street Journal reports (which actually sponsored the Israeli investment conference that the above Israeli budget story was written about).
The unrest is actually triggered by increases in gas-prices and budget constraints for the Palestinian Authority – matters countries such as Egypt are all too familiar with.
Iran is in talks to sell oil to Egypt: Setting aside the frosty political relations between the two, this may indicate something more financially significant. Egypt is expanding its band of oil-exporters to fill its shortage. Obviously there are issues with Tehran because of EU-imposed sanctions for exporting oil, but it could be a problem solved for Egypt which is desperate for energy resources to keep up its inefficient energy subsidy system and power plants.
Twenty more “Niles” needed to feed growing population – Of course the irony here is that despite Egypt having it’s very own Nile, the country’s population still doesn’t get access to equal amounts of water.
Hisham Fahmy, who heads the American Chamber of Commerce, spoke to the Financial Times about the emergence of the Brotherhood and how they compare to the former regime:
Mr Fahmy says AmCham members considered Mr Mubarak’s economic policy to be “on the right track, though it lacked the social element and social safety net and the idea of trickle down just did not happen”.
What is clear from the high profile US delegation visit this week is the absence of the Brotherhood. Ministers under prime minister Hisham Qandil may have been present at the meeting on Sunday but the dialogue was mainly focused on big business and the US benefiting.
It begs the question: what is president Mohammed Morsi’s policy plan? Roula Khalaf, the FT’s Middle East editor wrote a succinct critique of Mr Morsi and the challenges he has ahead.
Interesting insight from the Council of Foreign Relations’ blog into Egypt’s colonial roots and how that’s had an impact on how society views the International Monetary Fund Loan. It gives a potted history of how history shows Egypt selling off its core assets, including parts of the Suez Canal.
By 1875 Egypt was so debt-ridden that the Khedive sold all of the country’s shares in the canal to the British Crown. The canal was a triumph of French engineering and financing, but it was also an Egyptian national asset that slipped away from the country to service debt to foreigners.