The BIG circus arrives in Egypt.

Luxor has both Christian and Moslem communities and the politics of the Middle East are equally diverse. Air your views on the situation.

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A-Four
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Re: The BIG circus arrives in Egypt.

Post by A-Four »

I am sure we can all agree, Egypt's financial situation is dire. The problems go back to 2009/10 when Mubarak was in power. He requested a $3.5 Billion loan from the I.M.F., with the agreement that a new property tax would be fully implemented, reform of the civil service and pay freeze, plus a reduction to certain subsidies, mainly benzene,.......the loan was never given.

When we get to 2012, we discover the Bank of Egypt's reserves have fallen by half to $16.5Billion, it is for others to speculate where the rest went. Since then there has been no negotiations with the I.M.F. for that initial loan, instead Egypt has been receiving 'begging bowl' loans from mainly Middle East countries, but this has now stopped, and the nation truly faces the abyss if the I.M.F. walks away from this situation.

President Sisi this week has said 'Egyptians need to accept harsh economic measures'. He knows that if he heavily taxes the middle and upper class of Egyptian society, they will simply stop purchasing, for it is they that generate the fiscal wealth of the nation. Within 24 hours the president made a further announcement, 'Government will not accept an I.M.F. if the poorest are to suffer most'. Such a statement could have easily been made by Mubarak, for it craft alone. What the poor certainly will see is a three pronged attack upon them 1.) Indirect tax increases of up to 15%. 2.) Rampant inflation of at least 14% per annum. 3.) Severe reduction in important survival subsidies.

So, back to the I.M.F. in Cairo, on arrival, a proposal of a $7 Billion per year loan for three years was put before them, it was immediately rejected. A new proposal now on 'the table' a one off $12 Billion loan has been proposed. It seems the I.M.F. are demanding a high cost for such a loan, the privatisation of Egypt's oil and gas concerns. ( I wondered why B.P. and B.G. was in town last week.) it also appears that there must also be a special issue of hard currency bonds by the Bank of Egypt. (Has someone discovered the reserves are not quite what they should be.) Plus the usual conditions that apply when you are dealing with 'the bank of last resort'.

Egypt's annual budget runs from August to July each year, this week saw the start of the new financial year, yet no budget has been passed by the House of Representatives, let alone ratified by the president. The Finance Minister of Egypt told the press on Sunday, that negotiations with the I.M.F. was not about 'conditions'..............well, I've got news for him. :wi


A-Four
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Re: The BIG circus arrives in Egypt.

Post by A-Four »

newcastle wrote:
A-Four wrote:
In my understanding of forums, opinions are what they are all about.
Opinion.....and transmitting information, wouldn't you agree?

But if all you offer is opinion, fair enough. Your opinion is as valid as anyone's although you sometimes dress it up as information ;)
In my opinion, a valid opinion is where others may feel this is an informed opinion.
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Re: The BIG circus arrives in Egypt.

Post by newcastle »

A-Four wrote:
newcastle wrote:
A-Four wrote:
In my understanding of forums, opinions are what they are all about.
Opinion.....and transmitting information, wouldn't you agree?

But if all you offer is opinion, fair enough. Your opinion is as valid as anyone's although you sometimes dress it up as information ;)
In my opinion, a valid opinion is where others may feel this is an informed opinion.
Au contraire.

ALL opinions are valid.

Whether they are informed opinions - well that rather depends who's profering them, and their qualifications in doing so :cg
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Re: The BIG circus arrives in Egypt.

Post by newcastle »

A-Four wrote:
newcastle wrote:
A-Four wrote:
In my understanding of forums, opinions are what they are all about.
Opinion.....and transmitting information, wouldn't you agree?

But if all you offer is opinion, fair enough. Your opinion is as valid as anyone's although you sometimes dress it up as information ;)
In my opinion, a valid opinion is where others may feel this is an informed opinion.
As you rarely, if ever, produce any verifiable corroboration in support of your pontifications, it's rather difficult to judge , or for others to "feel", whether your opinions have any validity whatsoever :P
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Re: The BIG circus arrives in Egypt.

Post by A-Four »

A-Four wrote:(Has someone discovered the reserves are not quite what they should be.) :wi
Well, it seems that the I.M.F. today demanded to have a look in the vaults, and they discovered a short fall of $2 Billion, the Finance Ministry made excuses that $1 Billion had been returned to Qater (this amount was initially a loan to Mousi). $715,000,000 payment to the Paris Club (a sort of international loan shark concern), and various other payments. Unfortunately, the Ministry could not say where a loan from Saudi Arabia of $1.5 Billion had gone,........well, easy come easy go, as they say.

The international set who work in the finance markets all read The Economist, this weeks issue has a very damning report on Egypt, I am certain the I.M.F. Gang in Cairo will have read it. As I have written in the distant past on this form, the I.M.F. do not give a fig about the poor of any nation, in fact the poorer the nation the more the people suffer., when they offer its leaders a loan. I understand today electricity prices are to rise dramatically very soon In Egypt, and the subsidy is to be greatly reduced.

NOTE. - I expect a devaluation of the LE by the end of this week. I would imagine 15.50LE to £.
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Re: The BIG circus arrives in Egypt.

Post by newcastle »

A-Four wrote:
NOTE. - I expect a devaluation of the LE by the end of this week. I would imagine 15.50LE to £.
Really? :lol:
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Re: The BIG circus arrives in Egypt.

Post by carrie »

A Four if I remember correctly you forecast that the E pound would be over 15 by Christmas 2015 still waiting. :)
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Re: The BIG circus arrives in Egypt.

Post by Dusak »

You can get that this week, just need to know where the stone is that needs turning over. Or so I'm reliably informed.
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Re: The BIG circus arrives in Egypt.

Post by newcastle »

Dusak wrote:You can get that this week, just need to know where the stone is that needs turning over. Or so I'm reliably informed.
On the "black market" maybe.

The official rate (which is what A-Four is referring to) is 8.88 and I can say with some confidence it will NOT reach 15 by this weekend :wi
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Re: The BIG circus arrives in Egypt.

Post by Horus »

It has always been my experience that when extremely higher exchange rates are offered on the black market that there are many people desperate to get their money overseas and prepared to pay a high premium to do so, in most cases the local currency collapses within the next few years. It seems to me that Egypt is pretty lax when it comes to currency exchange, many countries will have a system where they determine what it takes to holiday/live in the country for a certain period of time and can either ask you to produce proof of your monetary exchanges for that period, (to see it is official) or that it is entered in your passport when these exchanges take place and can be checked at immigration, so how easy is it for an Egyptian to send money abroad?
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Re: The BIG circus arrives in Egypt.

Post by newcastle »

Horus wrote:........ so how easy is it for an Egyptian to send money abroad?
Very difficult indeed.

Although there is a keen interest from Egyptians in buying real estate off "distressed" foreigners they run into a problem because the seller will want dollars, euros or sterling.....and the banks don't have any. So they have to go to he "black market"....pushing up the cost by anything up to 50%.

There are severe restrictions at the moment on currency movements out of Egypt.
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Re: The BIG circus arrives in Egypt.

Post by Horus »

Thanks Newcastle, I thought it would be very difficult, but I didn’t factor in your Egyptians buying foreign owned property though and needing to pay in another currency, so that may well account for the high black market rate. Having said that, is the high rate of exchange only in the tourist areas? So in view of the foreigner wanting Sterling or Dollars how does that work in Egypt? Is it a case that they just take it out with them when they leave and chance it, or are they (the foreigner) allowed to externalise a legitimate amount of money out of the country. Again going on my own past experiences this was usually strictly controlled and all monies even when allowed were usually scrutinised and had to be justified before the national bank would authorise the transfer in another currency to the recipients domicile country and even then it was subject to the said currency being available, so could take some time or even be staged over several years.
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Re: The BIG circus arrives in Egypt.

Post by newcastle »

Horus wrote:Thanks Newcastle, I thought it would be very difficult, but I didn’t factor in your Egyptians buying foreign owned property though and needing to pay in another currency, so that may well account for the high black market rate. Having said that, is the high rate of exchange only in the tourist areas? So in view of the foreigner wanting Sterling or Dollars how does that work in Egypt? Is it a case that they just take it out with them when they leave and chance it, or are they (the foreigner) allowed to externalise a legitimate amount of money out of the country. Again going on my own past experiences this was usually strictly controlled and all monies even when allowed were usually scrutinised and had to be justified before the national bank would authorise the transfer in another currency to the recipients domicile country and even then it was subject to the said currency being available, so could take some time or even be staged over several years.
A foreigner or an Egyptian is restricted in the daily amounts he can take from a, say, dollar account held in an Egyptian bank. I believe it is possible for a foreigner to transfer larger amounts out of the country if it can be shown that they represent the legitimate proceeds of, say, a property sale. I expect there's be a lot of bureaucracy involved.......and corresponding "fees". Who bought it...where the money came from....in what currency etc. etc.

In cash terms, you are limited to $10,000 p.p. if you are taking notes out of the country.

I reality, we're reaching a situation where a foreigner selling a property in Egypt has to find a buyer with hard currency funds abroad....which can be transferred without any of the problems I've mentioned.
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Re: The BIG circus arrives in Egypt.

Post by Horus »

Thanks Newcastle, it all sounds very familiar and what I had expected would be the case :up
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Re: The BIG circus arrives in Egypt.

Post by Major Thom »

The LE did go over 15 to the gbp, but dropped back when UK voted for BREXIT. But yes even with BREXIT IT WILL EVENTUALLY GO OVER 15 to the pound. Good news for you all, you may think but watch prices soar!
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Re: The BIG circus arrives in Egypt.

Post by carrie »

Just looked at numerous currency comparison websites MT and none of them show the Egyptian pound reaching 15 during the past ten years. Are you talking about using the black market :?:
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Re: The BIG circus arrives in Egypt.

Post by newcastle »

newcastle wrote:
Dusak wrote:You can get that this week, just need to know where the stone is that needs turning over. Or so I'm reliably informed.
On the "black market" maybe.

The official rate (which is what A-Four is referring to) is 8.88 and I can say with some confidence it will NOT reach 15 by this weekend :wi
On re-reading A-Four's post I see he was referring to EGP to GBP (rather than $). Currently it's about 11.6.

15 by end of week?....official?.....no way .
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Re: The BIG circus arrives in Egypt.

Post by Dusak »

The currency movement restrictions are nothing new here. When former wife decided to give our joint account a dam good spanking when she left, first the bank contacted me to gain permission to transfer the money to the UK, permission that I gave cos I'm a good guy, they had to call it a transfer for emergency medical funds. I think that anyone would be well and truly stuffed if they had large amounts of Stirling here and wanted to move it oversees. A friend attempted to do this last year but had to abort their plans due to the banks refusal, but they could of done it little by little but this would of taken at least three years.
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Re: The BIG circus arrives in Egypt.

Post by A-Four »

Dusak wrote: I think that anyone would be well and truly stuffed if they had large amounts of Stirling here and wanted to move it oversees. A friend attempted to do this last year but had to abort their plans due to the banks refusal, but they could of done it little by little but this would of taken at least three years.
Hold on there Dusak, there are certain avenues still available when we are looking at big money. Do you think for one moment that when the Asian people got kicked out of Uganda, the smart money remained there,........I think, sorry, I know it did not.
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Re: The BIG circus arrives in Egypt.

Post by A-Four »

Reuters are reporting today that half of the 94 exchange bureaus in Egypt have been closed down. Also the LE reached a new high from 12.20 to 12.65 to the $ on the black market. If this goes on much long we will not know the difference from £ or $. :wi .
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