A report by “Masrawy” website said that the Egyptian pound’s depreciation is still obsessed with the exchange rate in Egypt.
Several international rating institutions stressed the need for Egypt to take this step to solve its currency saving crisis, but it seems that there are “alternative ways” that the government can take instead of floating.
Last December, the International Monetary Fund agreed to cooperate with Egypt in an economic reform program over a period of 46 months, and to provide it with financing worth $ 3 billion in several tranches, which would solve the dilemma.
While the fund did not explicitly announce the reasons for delaying the first review of the program, which leads to the disbursement of the second tranche of the loan, reports by international institutions and economic analysts indicate that the reason is a number of unannounced reforms, including the application of a flexible exchange rate.
The value of the pound has witnessed three declines since March 2022, but investors believe that there is more decline. While the dollar is trading at 30.9 pounds, an increase of about 96% compared to what it was on March 20 of last year.
Societe Generale expects the pound to depreciate by 16%, bringing the dollar to 37 pounds by the end of the year, near the same level now changing on the black market, according to the agency.
The price of the dollar in the parallel market is trading at about 38 pounds, while the official price is close to the threshold of 30.9 pounds.
And the Egyptian website quoted a report published by Bloomberg Agency this week, which proposed a solution regarding the government offering program – which is suspended due to the Gulf’s desire to lower the price of the pound – which suggested that the government offer an exchange rate for each transaction to sell assets separately, which means that it is reaching agreements for the offering program, which is the basis of its agreement with the Fund. criticism.
Egypt is seeking to sell shares of at least 32 companies within the government’s offering programme. This month it sold a 9.5% stake worth $121 million in Telecom Egypt, of which it still owns 70%, mainly to local investors.
Economists who spoke with Bloomberg also suggested that the government provide a “discount on the exchange rate” to the Gulf countries linked to the deals, in order to speed up the sale process and comply with the fund’s program, which would facilitate obtaining the second tranche.
The economist, Hani Tawfik, suggested what he called the “only, indeed, the only solution” to the crisis of providing the dollar to pay Egypt’s obligations, that a special fund be established to which all the revenues of the Suez Canal, which currently amount to about $8 billion annually, would be devolved, and that bonds be issued that trade in international market and mature within 50 years, in exchange for a return,
He explained that this does not mean mortgaging the channel, but the bond returns will be paid through the investment returns of the fund itself.
This article was originally published by RT.