More than a year after it was first slated, finally some confirmation that the Obama administration is close to a deal with Egypt’s new government for $1 billion in debt relief.
The move “appears to reflect a cautious easing of US suspicions about Morsi and a desire to show economic goodwill to help keep the longstanding US-Egyptian partnership from deteriorating further,” Reuters said.
Rebel Economy sees it more as a reinforcement of some history between the US and Egypt – writing off debt which would have otherwise left the country bankrupt.
Last week in an American Chamber of Commerce sponsored meeting, US officials also talked about two financing opportunities: $375 million in financing through the US Overseas Private Investment Corporation, a government development finance agency, for loan guarantees for Egyptian SMEs; and $60 million to help launch such firms through a new US-Egypt Enterprise Fund.
Aside from these promises of aid and debt relief, Egypt is skating on thin ice and trying to avoid a devaluation. Momtaz El Saied, the finance minister yesterday urged parliament members to approve the IMF loan so the country wouldn’t repeat the “catastrophe” of currency devaluation.
So we return to the same issue.
Politicians seem to be forgetting that the pressure on the currency is already pushing the Egypt pound to a 7-year low. So what will it be? An managed or unruly fall in the value of the pound?
As long as Egypt’s balance of payments remains in a deficit (i.e., Egypt is buying more than it can sell – mostly because of an inefficient subsidy system) the domestic currency will be under pressure, and the government will attempt – unsuccessfully – to manage by spending billions of dollars. The time for a controlled devaluation should be soon, before the currency falls to a level that can no longer be managed.
Egypt’s El Sewedy Electric, the Arab world’s biggest listed cable maker, reported an 82-% drop in second-quarter net profit on Monday.
Vodafone has agreed a partnership with Middle Eastern telecoms operator Zain that will allow both companies to use each other’s networks and services in the region.
Drydocks World, Dubai’s ship overhaul company, made history last week in a case that used specialist insolvency legislation to force through a financial restructuring of its $2.2bn debts, according to this FT article.
Decree 57 was a bold and imaginative step forward in the restructuring of the finances of Dubai,” the chairman of the Dubai World Tribunal during his judgment on the Drydocks case was cited as saying.
Bahrain’s economy shrunk in the second quarter, according to figures released yesterday, signalling how the small Gulf island is struggling to shake off more than a year of political unrest.
A prominent face for the revolution has been activist Nabeel Rajab, but his imprisonment continued to thwart efforts by the majority Shi’aa population which are fighting against the minority Sunni-led government.
Former civil war foes Sudan and South Sudan are to resume talks on Tuesday in Ethiopia that mediators hope will produce a deal to secure the volatile joint border and clear the way for the two countries to resume oil exports, Reuters reports.
The countries have been locked in a series of disputes since South Sudan split from its northern neighbour over a year ago under a 2005 peace deal that ended decades of war.
Meanwhile Egypt is struggling work out how to approach South Sudan, a state newly in limbo, writes Amira Ahmed in the FT.
The two countries may share a river – the Nile – that is of vital importance to both, but with Egypt embroiled in its messy transition and economic turmoil, its leaders have lacked the time or political will to reshape ties since South Sudan’s secession in July 2011.