The January 2011 uprising has been the turning point for Egypt. Annual growth was at a high 7% and foreign reserves exceeded 36 billion dollars prior to the protests. The unrest since 2011, had its impact on revenues, growth and naturally, the Egyptian pound.
The local currency dropped from 5.8 pounds to the US dollar, to 8.7 to the US dollar on the black market, compared to an official rate of 7.73. The Central Bank Governor placed a cap on dollar deposits. But due to investor complaints, he raised the cap from 100 thousand dollars a month to 250 thousand.
“I do endorse the steps taken by the governor and I think they were long overdue they should have been done much much earlier. Even if I didn’t find what I wanted, in foreign currency, but this must be done for the interest of egypt”Elhamy El Zayat, Chairman, EMECO Group
There were signs of an economic revival in 2015. But tourism collapsed after the crash of the Russian passenger jet last october , Suez Canal revenues have been on a downward spiral and FDIs are lower than expected. This led to a dwindling national income and more pressure on the pound. Experts realise that central bank measures to protect the local currency are only temporary. Some are taking action.
“We are helping establish new companies to go into the export market so we don’t only depend on exisiting policies. We need new companies. Our exports fell from 22 billion dollars to 19 billion in the last few years for several reasons such as our unstable political climate .”Khaled Miqaty, President, Egyptian Exporters Union
Increasing exports will definitely help raise state revenue and stabilise the Egyptian pound. Businessmen are planning to target the continent rather than the traditional European and American markets.
“We will begin with the Kenyan in east africa as it’s the closest to us . We will establish export stations in 12 countries there, then we will move to west africa which is a huge market like Angola and Nigeria and then central africa. We have the new trade pact that will merge COMESA and SADC. We are also working on 26 trade agreements with african countries.”Khaled Miqaty, President, Egyptian Exporters Union
The real remedies to the egyptian pound are not protectionist policies by the central bank, but to increase sources of revenue.. from tourism to exports and FDIs
