Egypt Confident About $23 Billion Debt Inflows

Reporting and discussing local, national and international news items.

Moderators: DJKeefy, 4u Network

User avatar
Winged Isis
Egyptian Pharaoh
Egyptian Pharaoh
Posts: 3867
Joined: Thu Jul 05, 2007 2:38 pm
Location: Australia
Has thanked: 1568 times
Been thanked: 1027 times
Gender:
Australia

Egypt Confident About $23 Billion Debt Inflows

Post by Winged Isis »

Egypt Confident About $23 Billion Debt Inflows

By: Manus Cranny and Ahmed Fetehaon: 01 May 2018||In: Finance Print Email

Egypt’s finance minister said he’s confident the $23 billion that foreigners invested in Egyptian Treasury bills will stay in the country, thanks to its improved credit profile and rising global liquidity.

The trade-off between risks and returns remains attractive, and investments have been rising in “recent weeks and months,” Amr El-Garhy said in an interview with Bloomberg TV. Credit rating companies, which haven’t significantly upgraded Egypt’s junk rating in the past two years, should give Egypt a “better look,” El-Garhy said.

Rising global interest rates, coupled with lower yields inside Egypt, have fueled concerns about the nation’s ability to continue to attract money from abroad. The funds played a key role in bridging the gap in Egypt’s finances with the outside world, and have helped boost the nation’s foreign reserves to record levels.

El-Garhy said the level of foreign investments in Egypt’s high-yielding local currency debt is “manageable,” and below historical 2010 highs equivalent to almost $30 billion in today’s terms.

The Egyptian economy reappeared on foreign investors’ radar after the government embarked on an economic overhaul plan in November 2016 that included floating the currency and slashing subsidies. The measures, backed by the International Monetary Fund, helped economic growth to pick up to about 5 percent and enabled authorities to raise more than $13 billion on international bond markets.

The weaker currency, however, propelled inflation above 30 percent last year, pressuring Egypt’s 96 million people, half of whom already lived near or below the poverty line. Price increases slowed this year, with the annual rate easing to 13.3 percent in March.

The minister said Egypt is witnessing “good momentum” when it comes to inflation, and reiterated predictions that it would drop as low as 11 percent by the end of 2018.

El-Garhy also said: “Nothing is cast in stone” with regard to the goal of scrapping the bulk of fuel subsidies in 2019; the government is trying to balance spending cuts with the impact on citizens The government is talking with banks on ways to hedge the increase in oil prices but wants to “pick a good time for it” Egypt expects $10 billion in foreign direct investment in the fiscal year ending June 30, and targets a 20 percent to 25 percent increase in the 12 months following The bulk of foreign direct investments will not necessarily originate from oil-rich Arab countries because many multinational companies are “seriously” considering creating regional hubs for their activities in Egypt.


http://businessweekme.com/2018/05/01/eg ... t-inflows/


Carpe diem! :le:

A-Four
Egyptian Pharaoh
Egyptian Pharaoh
Posts: 3857
Joined: Wed Jul 29, 2009 10:04 pm
Location: London
Has thanked: 1612 times
Been thanked: 1722 times
Gender:
China

Re: Egypt Confident About $23 Billion Debt Inflows

Post by A-Four »

Who ever wrote up this crazy statement on how Egypt's finance minister sees the state of play at Bloomberg must have wet themselves laughing thoughout.

User avatar
Major Thom
Royal V.I.P
Royal V.I.P
Posts: 2723
Joined: Mon Mar 30, 2015 5:45 am
Has thanked: 277 times
Been thanked: 550 times
Gender:
Cyprus

Re: Egypt Confident About $23 Billion Debt Inflows

Post by Major Thom »

Not a clue, bit like their weather forecasts!! :lol:

newcastle
Egyptian God
Egyptian God
Posts: 7451
Joined: Thu Oct 17, 2013 11:49 am
Has thanked: 2102 times
Been thanked: 6236 times
Egypt

Re: Egypt Confident About $23 Billion Debt Inflows

Post by newcastle »

Major Thom wrote:Not a clue, bit like their weather forecasts!! :lol:
Perhaps from your expertise in international finance you'd care to let us know where they're going wrong?

I seem to recall that your own, admittedly limited, involvement in investing in Egypt wasn't entirely successful :lol:

User avatar
Major Thom
Royal V.I.P
Royal V.I.P
Posts: 2723
Joined: Mon Mar 30, 2015 5:45 am
Has thanked: 277 times
Been thanked: 550 times
Gender:
Cyprus

Re: Egypt Confident About $23 Billion Debt Inflows

Post by Major Thom »

There is knowing the the ways debt and things can be handled, and if the courts in Luxor had been as efficient as the Police at that time, the offending thief would have been in prison for between 5 to 10 years depending on my thoughts after a period of time, Seems it did not effect my finances though did it Newc. You always cover a debt otherwise don't take it out, like newly become Grandma's do!! :lol: :lol: Its the same as working in Luxor with no permits because you cannot afford to live>>>>

User avatar
Hafiz
V.I.P
V.I.P
Posts: 1284
Joined: Mon Feb 20, 2012 4:23 pm
Has thanked: 814 times
Been thanked: 747 times
Gender:
Australia

Re: Egypt Confident About $23 Billion Debt Inflows

Post by Hafiz »

Its low classified high risk debt that requires insurance.

Bizarrely, and its a long story, a deal of it is very short term. The crunch will be payment time - as if Egypt ever paid its debts in the last 150 years.

Because its mobile international capital it won't stay' in Egypt - it will do what any sane investor, but not an Egyptian Minister, would do - move to the next best.

The screamingly remarkable fact of the past 4 years is that international capital/corporations are staying away in therms of actual physical things on the ground. They won't touch Egypt.

What I can't make sense of are the international rating agencies on Egyptian debt - they have improved the rating from beyond awful to just very awful. I also don't understand the resilience of the currency - it should be worse - and suspect the very dubious Central Bank of Egypt of manipulating rates. Jordan's and Saudi's tossing out/scaling down of expatriate workers/Egyptians will have a major negative effect on the E. currency/trade balance.

Not a single large corporation in the world has invested a penny in Egypt in the last 4 years. Wonder why.

There are two things about Egypt's sovereign debt. One, the interest rates on it are high because of the risks. Second the government's disclosures of its size are bot to believed. At the moment the government states its about $US90 billion making it one of the highest in the world (much worse given interest rates) on a GDP ratio. I think its much higher and that the whole debt package isn't repayable. It will be interesting to see if this emerges or whether the US/IMF/World Bank protect them as it did in 1990 - their last insolvency. Why would anyone protect these creatures.

newcastle
Egyptian God
Egyptian God
Posts: 7451
Joined: Thu Oct 17, 2013 11:49 am
Has thanked: 2102 times
Been thanked: 6236 times
Egypt

Re: Egypt Confident About $23 Billion Debt Inflows

Post by newcastle »

Not a single large corporation in the world has invested a penny in Egypt in the last 4 years. Wonder why.
I wonder if that's true.

CAIRO (Reuters) - BP (BP.L) is looking to invest over $1 billion (721.66 million pounds) in Egypt this year, making the country once again a top destination for investment, its CEO said on Monday.

https://uk.reuters.com/article/uk-bp-eg ... KKBN1FW1OJ

Representatives for General Electric, Johnson, Master Card, AbbVie, Merck and Co. for medicine, Cargill, Exxon Mobil, Kellogg and JP Morgan Chase Bank attended the meeting and expressed their desire to scale up their investments in Egypt in the upcoming period, the statement added.

https://www.egypttoday.com/Article/3/22 ... nvestments

ENI will start producing from the giant Zohr natural gas field off Egypt’s Mediterranean coast by the end of 2017 and plans to invest $10 billion in the North African country over the next five years, Chief Executive Officer Claudio Descalzi said.

https://www.bloomberg.com/news/articles ... nding-plan

Egypt may exceed its $10 billion target for foreign direct investment this year as the weaker pound reduces the cost of doing business in North Africa’s largest economy and a new investment law comes into force, the investment minister said.

https://www.bloomberg.com/news/articles ... ister-says

User avatar
Hafiz
V.I.P
V.I.P
Posts: 1284
Joined: Mon Feb 20, 2012 4:23 pm
Has thanked: 814 times
Been thanked: 747 times
Gender:
Australia

Re: Egypt Confident About $23 Billion Debt Inflows

Post by Hafiz »

You are right - and wrong. I went too far. The exception is oil/gas but I thought BP got out a while ago in terms of physical effort. My guess is that they were traders and dealers of the product rather than diggers.

The US list - no one has made a commitment and Cairo is full of conferences that deliver nothing. A joke Chase sold out/ran out of Egypt 10-15 years ago and there is not a western bank that has had other than misery in Egypt in the last 25 years. You correct me but didn't Barclays run out 20 years ago. There hasn't been a US oil major in Egypt for three generations - I assume there is a reason for this. Cargill is a gold standard grain/food trader - my advice stay away - in any event Egypt is in love with Russian 3 star grains and the diseases that come with them and deals with the most dangerous trader in the world - the Jewish tax evading and utterly unprincipled Glencore. Merck will have no chance they deal in high cost copyright drugs whereas Egypt breaks international copyright law all the time. I could go on.

Lets assume you and the Cairo media are absolutely right and I'm cynically wrong. If all of it was 'done' there would be few jobs. Oil and gas have scant jobs many of them for high skilled Europeans - as the Saudi's well know. The other potential investors offer, my guess, jobs in the thousands or very low tens of thousands with many being low skill.

I'm informed by a long report prepared by PWC on the solar panel fiasco. In simple terms one of the most powerful business advice firms in the world says stay out. The reasons corruption - and interestingly the courts can't be trusted. Political risk was also mentioned. Note it seems that not a single major international investor nor power or solar company has become part of this project. One dubious Finish or Swedish minnow has. The bulk of investors in this multi billion dollar project are Egyptian investment consortia who have no skills in energy or solar. Who is going to build this thing - well probably the all skilled high tech military. Can I repeat this again. Egypt is embracing a major solar project without any proper technical, project management, construction or technology support and with no relevant financial support from companies in this area. It was ever thus.

The UK government keeps mentioning a huge figure of investment in Egypt but other than gas/oil I can;t see it.

If serious firms were going to be in Egypt then chartered accounting/auditing firms, consultancy firms, engineering firms, international legal firms, western banks, western stock brooking firms ets would be here or looking to come. They are all crashing into Saudi, including Jewish firms but Egypt is interesting in the near absence of all the support firms for proper corporate management. Compared with almost any other city in the world of its size its a business skills desert and the local firms that purport to do this work are no good - if they were good they would have overseas offices.

Its a small point and hard to prove. Money came into the Cairo stock exchange from overseas a few years ago. The index has performed very badly since 2008, the exchange is notorious for corruption and my guess is that a large proportion of that money has now left because of poor performance. For example, and relying on memory, the index is actually lower in absolute terms than 2008 or so. Confirming the view that the exchange is no good and capital short is the near absence of IPO'S and share issues to raise extra capital. At this stage plans to establish Cairo as a financial center seem worse than dead and the xenophobic/nationalist idea of floating government assets on it insane.

There are European contracts like the massive but unclear Siemens electricity power station project but I have difficulty finding overseas investors building facilities that will employ people over the long term.

Steigenberger investment is Egyptian investment - the crooked Chaity's. Hilton has talked about investment but I think no decision taken. Prince sleaze of Saudi seems to have his gigantic hotel proposals all in the same place - freeze. My guess is that smart investors will hold until they can make sense of the tourist implications of the complex Saudi, Jordan Sinai, 'project'.

Its a matter of debate and I overstated my argument but I believe the general position is true. Stay away. Even in the oil and gas industry don't forget that the government still owes international companies for oil and gas it 'took' years ago without paying. The current debt is still approx in the billions.

newcastle
Egyptian God
Egyptian God
Posts: 7451
Joined: Thu Oct 17, 2013 11:49 am
Has thanked: 2102 times
Been thanked: 6236 times
Egypt

Re: Egypt Confident About $23 Billion Debt Inflows

Post by newcastle »

We could argue the toss ad infinitum. The $10 billion FDI figure could be plucked out of the air.

Sisi has set a course of major economic revision in the country. which he obviously hopes will create employment before the idle youth vent their despair in something akin to the events of 2011.

I share your cynicism as to whether it will work...given the burden of a growing,and dreadfully uneducated/unskilled population, the endemic corruption etc etc

But It's too soon to be dogmatic.

Let's review the outcome in, say, 5 years' time

User avatar
Major Thom
Royal V.I.P
Royal V.I.P
Posts: 2723
Joined: Mon Mar 30, 2015 5:45 am
Has thanked: 277 times
Been thanked: 550 times
Gender:
Cyprus

Re: Egypt Confident About $23 Billion Debt Inflows

Post by Major Thom »

I keep going back to this for updated posts. The thing that seems wrong is the conflicting facts that they do not want foreigners in the Country, they are too suspicious of them, and yet they seem to want to want foreign cash. Do they really know what they want? Maybe they are still guessing what they want!

newcastle
Egyptian God
Egyptian God
Posts: 7451
Joined: Thu Oct 17, 2013 11:49 am
Has thanked: 2102 times
Been thanked: 6236 times
Egypt

Re: Egypt Confident About $23 Billion Debt Inflows

Post by newcastle »

Try reading "Economics for Idiots" MT.

How much do you think the foreigners who reside here - for they're the ones you seem to be obsessed about - actually contribute to the nation's coffers?

Diddly squit! Maybe your conspiracy theory about them trying to get rid of foreigners is right.....but it certainly won't affect government revenues

Tourism, on the other hand, is important, not least because it employs huge numbers.

And they are trying hard to attract them....in their own weird way :lol:

User avatar
Hafiz
V.I.P
V.I.P
Posts: 1284
Joined: Mon Feb 20, 2012 4:23 pm
Has thanked: 814 times
Been thanked: 747 times
Gender:
Australia

Re: Egypt Confident About $23 Billion Debt Inflows

Post by Hafiz »

Newcastle. Thanks. Will respond more specifically and less rhetorically, when I can assemble more data.

5 more years of continued chronic, high, youth unemployment - higher amongst graduates - sounds dangerous to me - even for the 'million man mafia'. Do you have a gun license - UK I mean of course.

My general point at this stage is that whatever the national or international new investment - its not going to solve unemployment. The energy/oil stuff will employ few. The construction orgy is for low wage, low skilled workers, often in remote locations and is episodic. Tourism is episodic, often remote, low skill and low wage - also subject to other fluctuations like terrorism. I don't see any government plan or investor behaviors that will provide the millions of medium skilled and medium wage jobs.

There is a skill problem but there is also an investor problem. For example Microsoft used to be in Cairo - with the crackdown/internet blockages it ran out. Its the 1st, 2nd or 3rd largest company in the world and others, not only in the IT industry, would have noticed. I am not aware of a 4 or 5 star firm, other than in oil and I don't rate ENI high on the corruption index, that is prepared to take the many billions of dollars decisions that will produce jobs in the volume required.

The halting initiatives in the past few years that Cairo would become a financial center or an education center and riotous humor. Its banking and finance system are rotten and its education system a corpse. On the other hand, another post, the Gulf States are exploding with international investment in tertiary education from the best universities in the world who will not touch Egypt with a barge pole.

A more general point. The countries that have emerged and done well in the last 20 years in the third world have all done a few things. They have focused on manufacturing (it employs a lot), they have focused on exporting to the west (Egypt's biggest export is its tossed out 'dissidents' every other product including agriculture is a joke) they have capitalized on their cheap labor, they have adopted western manufacturing techniques and technologies, they have obtained contracts to produce western labels (low, medium and high market) or products, they have (in China less) allowed western companies to set up manufacturing in their own country (for 70 years even multinationals can't have a 100% owned firm in Egypt you usually have to include some lazy connected stooge or the Army as a partner), there is a high priority on quality (Egyptian manufacturing quality is appalling and not just because of skills - management is possibly the worst in the world).

Of course there are other points but this describes why China, India (much more complex and diverse), Bangladesh and Indonesia have done so well. Even Vietnam makes $US900 US jackets for a prime upper market US label and Turkey produces premium labels.

I think its also true that the management/entrepreneurial classes in these countries are skilled, hard working and deliver what they contract. The best that could be said of their Egyptian equivalents is not publishable.

About the only thing certain about the above is - Egypt will never get there and will continue to wallow where it is for at least the next few decades - although the President announced last year that Egypt will be the 19th largest/most enterprising economy in the world by 2030 - but he had no plan on how to get there - it was ever thus.

  • Similar Topics
    Replies
    Views
    Last post
  • Egypt at the end of WWII - The UK in its Debt
    by Hafiz » Mon Jun 10, 2013 4:00 pm » in Literary Corner
    0 Replies
    198 Views
    Last post by Hafiz
    Mon Jun 10, 2013 4:00 pm
  • Egypt Debt Downgraded Before Christmas - Same as Greece.
    by Hafiz » Thu Jan 10, 2013 12:46 am » in Know Egypt
    0 Replies
    133 Views
    Last post by Hafiz
    Thu Jan 10, 2013 12:46 am
  • Morsi renews promise of debt amnesty for Egypt farmers
    by DJKeefy » Wed Sep 12, 2012 1:18 pm » in Know Egypt
    0 Replies
    240 Views
    Last post by DJKeefy
    Wed Sep 12, 2012 1:18 pm
  • UAE allocates 4 billion dollars to Egypt
    by DJKeefy » Sat Apr 23, 2016 5:59 pm » in News and Sport
    1 Replies
    297 Views
    Last post by Hafiz
    Sun Apr 24, 2016 2:19 pm
  • Egypt unveils $4.9 billion stimulus package
    by DJKeefy » Mon Feb 10, 2014 11:24 pm » in Know Egypt
    13 Replies
    2241 Views
    Last post by Hafiz
    Tue Mar 18, 2014 12:36 am