To deal with an unprecedented economic crisis, the Egyptian government organized, through two state-owned banks, the sale of bonds at 25% interest. The banks exceptionally opened their doors despite the Coptic Christmas holidays.
From our correspondent in Cairo,
For an unprecedented crisis, unprecedented measures. 25% interest, a record. The objective is to induce savers to sell their dollars to buy bonds in Egyptian pounds. A way to stop the vertiginous rise of the American currency, the reference currency of the Egyptian Central Bank.
In ten months, the pound has fallen by more than 70% against the dollar. Strangled by the service of an uncontrolled foreign debt and a large budget deficit, Egypt had to submit to the diktat from the International Monetary Fund for an emergency loan. And for his oxygen, the “doctor” IMF prescribed, as usual, to devalue the local currency.
Series shortages
Consequences of this lack of dollars: shortages of all kinds. Almost no more imports of trucks and construction vehicles at a time when the government embarked on pharaonic constructions: administrative capital with skyscrapers, new towns, roads, bridges, trains and even monorail. No cars for individuals either. Industry is running out of machine tools and spare parts, and cattle and chicken farming of animal feed. Dollar revenues from gas, fruit and vegetable exports, tourism and the Suez Canal are devoted, in very large part, to the importation of basic necessities such as wheat and oil.
Result: inflation exploded. We exceeded 20% inflation in December and this will only increase in January, according to experts. A disaster for more than a quarter of the Egyptian population who live below the poverty line, that is to say less than two euros per day and per person. The middle classes are also affected. Eating costs twice as much as a year ago. In the land of the pharaohs, discontent increases as the dollar rises against the Egyptian pound.
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