– Egypt’s central bank held a bumper auction on Wednesday, selling $1.3 billion from its foreign reserves to cover strategic imports such as wheat, meat and cooking oil. As the country grapples with an economic crisis, the central bank’s foreign currency sales are an attempt to keep the pound strong and reassure the nation that the government can afford basic commodities.
But as Patrick Werr, economics reporter at Reuters writes:
Despite the sales and a more expensive dollar, businesses have racked up hundreds of millions in unfulfilled requests for foreign currency, forcing them to turn to a black market that has mushroomed in recent months.
The pound has depreciated on the black market, showing that a strengthening pound on the official market isn’t as accurate as the central bank may want to convey.
– More than 600 factories have shut down in Egypt in recent months, the country’s trade minister said in an attempt to correct a statement from the minister of manpower Kamal Abu-Eita, who announced a few weeks ago that more than 4,500 factories had closed in Egypt. The latter figure had come from a Centre for Trade Union and Worker Services report released earlier this year, but the methodology was questioned.
The fact that the new trade minister Mounir Fakhry Abdel Nour is trying to downplay the number of closures is not a very good sign, but it’s an even worse signal that he’s questioning the figures of his colleague.
Either way, even at just 613 factories, that is a big blow to Egypt’s industrial sector, one of the major backbones for the economy. Though the Morsi administration and the caretaker government before that had discussed investing money to re-open factories, nothing ever came to fruition.
Many of these factories are hit by multiple problems including power cuts, strikes, poor security, and difficulty securing loans in credit markets where they are squeezed out by an indebted government.
– Syria’s war economy has created a thriving underground black market, this fascinating Reuters report explains.
As state buyers face growing problems trying to purchase food from foreign suppliers because funds are frozen in bank accounts abroad, middlemen and small companies working with shipping agents are finding ways to do profitable business, operating from neighbouring countries such as Lebanon.
That is even more important at a time when Damascus has had to cancel a number of tenders to buy wheat, sugar and rice. It’s part of a growing shift in the way Syria trades with neighbouring economies, especially rewarding for those willing to take the risk.
– 400 litres of mazut (or heating oil) are promised for each Syrian citizen as regime insists it has enough fuel to cover domestic demand, Syrian News reports.
Though Syria doesn’t produce a lot of oil, it relies on imports to keep up with demand. But the war has severed ties with many of its fuel providers including oil traders in the European Union and dramatically impaired the ability to buy fuel because of dwindling reserves. Rolling power cuts and oil shortages now plague Syrians, forcing many to turn to the expensive black market.
Unfortunately, promises by the Assad regime that it will provide more fuel to Syrians are rarely fulfilled.