Cairo, City of the Living Dead!

Thebes, City of the Livings, the Crown Jewel of Pharaoh City the first. Home of Imhotep, Pharaoh's high priest, Keeper of the Dead!

Anck-Su-Namun, Pharaoh's mistress, no other man was allowed to touch here. She was buried in the City of the Dead (i.e., Hamunatra), the City of the Dead was the great burial of Egypt and the resting place for all Pharaohs.

Welcome again after a long Radio silence to the Macroeconomics Updates for the Egypt's newsletter, coming to you from Cairo, Egypt.

The analogy is too obvious, where it turned into an IRONY in modern Egypt, where Thebes or I shall say Cairo, the Capital, turned to be the City of the Dead, or let's be precise the Living Dead.

Let's begin with the fact we can see, where the road not taken led to. Recently, the Central Bank of Egypt, CBE had announced the latest fundamental CPI, which hit unprecedented levels in December 2022 amounting to 24.4% against 21.5% in November 2022. The index, which is derived mainly by the three musketeers of Food, Shelter and Drugs.

Whereas, the new year wasn't happy for Egypt that much, where Santa was left so cold in Europe this year due to the Ukranian Crises! The new year carry a payment deficit amounting to approximately US$ 5Bn that would be financed as depicted in the diagram to the left. 60% of the resources used to finance the deficit comes from direct external debt.

Given the fact that, we had approximately US$ 43Bn. Trade deficit for the first half of 2022/2023, this wasn't mitigated by the doubled Tourism revenues exceeding the US$ 10.7Bn., coupled with a Net Direct Investments amounting to US$ 8.9Bn. with an increase of 71.15% when compared to the previous year of 2021/2022. Suez Canal wasn't contributing that much with an increase of 18.6% for the current year against 2021/2022. One thing led to another, the deficit and the 2 times Exhange rate movements in March 2022 and October of the same year and eventually, in December 2022. This squashed the EGP to lose more than 25% of its value in 2022.

The Egyptian Government had to move fast to tackle all those problems in a 110 meters' hurdle race.

The Diagram to the left depicts, the main major resources of foreign currency in 2022/2023 (F) illustrated to the comparative figures in 2021/2022 (A).

Still in a situation where, the country is enjoying her task force abroad Dollar's transfers, while being on the top for decades, now it turned to be in the second place after the commodity exports with an increase of 15% Y-O-Y. The problem still, the majority of those exports are in raw state rather than being value adding products, where salaries and overheads are added up to maximize Egypt's trade balance.

Subsequent to the third exchange rate move in 2022, the Government, and to avoid any hikes in the parallel market, it injected about US$ 1.5Bn. to the markets in the first 10 days of 2023, a cue of more than US$ 5Bn of commodities waiting to be custom released still on the GO. Additionally, in an attempt to curb the inflation hikes as illustrated above, the NBE and MISR Bank issued new product of 25% interest rate certificates for only one year, the new certificate marked EGP 260 Bn in days and counting. The history narrate that no inflation rates were curbed as the route cause still there.

The IMF loan         

Meanwhile, the CBE announced lately that, Treasury Bills came back on track again after a year of negation from the Hot Money, where 182 days bids amounted to approximately EGP 51.85Bn. compared to only EGP 2.62Bn. on a week-by-week basis. The huge mount maybe a strong trail to the reflex of the Hot Money or the interest traders to the recent increase in the interest rate on the EGP, especially, Egypt had submitted to the various pressures that said, the EGP is overpriced and need to be devaluated again, the matter that happened in last December 2022.

The IMF loan closed the door and Beat the DOG! 
        

The IMF loan was different this time, after a Video call with CBE Governer and Egyptian Ministry of Finance, the IMF made it clear this time in a very strict terms to the 8 installments loan ends in 2026, where Egypt needs a worldwide accreditation throughout the IMF, due to the massive debt dossier it has. According to the recent press release of the IMF, the followings could be scooped:

1. Two Installments in March and September every year.
2. Two subsequent audits in September and December of each year.
3. Government's austerity measures throughout curbing expenditures for all ministries as announced by Reuters.
4. Postponement of any planned infrastructural projects that has a USD component according to CNN.
5. No more subsidy for fuel, and to be annexed to the international prices, the matter which is ranked to be sever and will impose a rising shadows over prices in Egypt spontaneously.
6. Subsidies only for healthcare and the ration goods, no mention for Education, no SURPRISE!

You can't be seen if you don't have a GREEN (i.e., $Dollars$) (Quote).

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