daily menu » rate the banner | guess the city | one on oneforums map | privacy policy | DMCA | news magazine | posting guidelines

Go Back   SkyscraperCity > Continental Forums > Africa > General Forums > Business, Economy and Infrastructure

Business, Economy and Infrastructure Our architecture, infrastructure, transport, economy and other related discussions



Global Announcement

As a general reminder, please respect others and respect copyrights. Go here to familiarize yourself with our posting policy.


Reply

 
Thread Tools
Old December 25th, 2012, 05:41 PM   #1
Wust El Balad
Registered User
 
Wust El Balad's Avatar
 
Join Date: Nov 2011
Location: Near you
Posts: 5,684
Likes (Received): 2104

Egypt's economic crisis to be harder than Greece one

Egypt’s credit rating on the slide


Quote:
Against the backdrop of the vehement political mayhem witnessed in the past weeks, credit rating agency Standard & Poors’ (S&P) decided Monday to further downgrade Egypt’s long-term credit rating from B to B-.

The negative outlook reflects our view that a further downgrade is possible if a significant worsening of the domestic political situation results in a sharp deterioration of economic indicators such as foreign exchange reserves or the government’s deficit,” S&P said.

This is the fourth credit rating cut by S&P since October 2011, when the rating was downgraded from BB to BB- over concerns that the government wouldn’t be able to manage the gaping budget deficit and dwindling foreign reserves.

The following month, S&P cut the rating from BB- to B+ due to the violence that preceded the November 2011 parliamentary elections.

“We assess the policy choices of Egypt’s ruling Supreme Council of the Armed Forces, such as allowing violence to escalate in Tahrir Square from 20 November in an effort to disburse protesters, as having weakened the prospects of a smooth political transition to democracy and having reduced the ability of the government to place the public finances on a more sustainable path,” S&P said in a statement.

In February 2012, S&P downgraded the country’s credit rating once again from B+ to B citing continuous instability and a plunge in foreign reserves.

The credit rating agency stated at the time that the country’s “external position has deteriorated and is likely to weaken further, absent stabilisation in the domestic political situation alongside external financial support.”

“This is an expression of the international financial markets’ grave disquietude over the status quo in Egypt, which makes it more difficult for the country to approach such markets,” the former finance minister, Hazem Al-Beblawi, told Daily News Egypt.

When asked whether the latest downgrade would influence the current negotiations pertaining to the $4.8bn IMF loan, Al-Beblawi said, “I don’t think that the impact of the latest credit rating downgrade would be severe to overall negotiation process. However, if the IMF approves the loan, it would be coming in with a much stronger mandate.” Worth mentioning that the downgrade really affected the negotiations.

“The downgrading of Egypt’s credit rating is reflective of Egypt’s economic situation; the levels of trust in the economy are falling which will directly deter investment,” former Finance Minister Samir Radwan told Daily News Egypt.

Radwan added that the government’s consistent indecisiveness in taking critical reformative decisions projects further propagates the level of instability in managing the economy. It also feeds the hesitance of the IMF to comfortably approve the much-needed loan.

“We also have to take into consideration that credit rating agencies are not always correct in assessing economic status; they came under heavy criticism during the global financial crisis of 2008 for giving financial institutions AAA ratings that were not reflective of the their genuine monetary standing. Having said that, we have many other indicators that point to the gravity of the country’s economic condition.”
http://dailynewsegypt.com/2012/12/24/on-the-slide/

Egypt limits travelers leaving country to US$10,000 in cash


Quote:
Egypt has banned travelers from carrying more than US$10,000 in foreign currency cash in or out of the country, as officials worry over pressure on its pound currency and a rush by Egyptians to withdraw their savings from banks.

Political turmoil over the past month has raised fears among ordinary citizens that the government — which has pushed back talks to seal IMF funding till January — may not be able to get its fragile finances under control.

The Central Bank has spent more than $20 billion of its foreign reserves to support the pound since the popular uprising that toppled Hosni Mubarak in early 2011. It now has only $15 billion, which is equal to only about three months of imports cover.

Presidential spokesperson Yasser Ali on Tuesday confirmed the government decision, which includes US dollars or their equivalent in other foreign currencies. The decision also forbids sending cash through the mail.

The decision prohibits all travelers from "bringing foreign currency into the country or carrying it out to only $10,000."

Any funds over $10,000 must be transferred electronically, Ali added.

Previously, travelers were simply required to declare any amounts above $10,000 to authorities on their way in or out.

Bankers say depositors had been withdrawing greater amounts of cash from their accounts since President Mohamed Morsy issued a constitutional declaration last month that expanded his powers and threw the country into a political crisis.

The crisis has complicated a $4.8 billion loan the government is seeking from the International Monetary Fund.

The IMF had been due to approve the loan on 19 December, but the government asked for a delay after it cancelled a series of unpopular austerity measures deemed essential for its approval.
http://www.egyptindependent.com/news...y-us10000-cash
__________________
Why so serious?
Wust El Balad no está en línea   Reply With Quote

Sponsored Links
 
Old December 25th, 2012, 08:34 PM   #2
BUTEMBO21
Mutu ya Chuma.
 
BUTEMBO21's Avatar
 
Join Date: May 2008
Location: Under the Sun and the Moon
Posts: 40,121
Likes (Received): 3106

I don't think it's comparable. though its been harder on both, but different status.
BUTEMBO21 no está en línea   Reply With Quote
Old December 25th, 2012, 09:16 PM   #3
Wust El Balad
Registered User
 
Wust El Balad's Avatar
 
Join Date: Nov 2011
Location: Near you
Posts: 5,684
Likes (Received): 2104

Quote:
Originally Posted by BUTEMBO21 View Post
I don't think it's comparable. though its been harder on both, but different status.
How so? Th Egyptian credit ratings is now comparable with the Greek one.
__________________
Why so serious?
Wust El Balad no está en línea   Reply With Quote
Old December 25th, 2012, 09:30 PM   #4
Ulpia-Serdica
ipso facto&manu militari
 
Ulpia-Serdica's Avatar
 
Join Date: Oct 2011
Posts: 7,756
Likes (Received): 3141

Quote:
Originally Posted by Wust El Balad View Post
How so? Th Egyptian credit ratings is now comparable with the Greek one.
The credit rating itself means nothing, because unlike Egypt, Greece does not borrow from the market but rather through the EFSF which is backed by the EU and is able to maintain a better interest rate. What is really hurting Greece are the austerity measures, not its borrowing costs or credit rating.
Ulpia-Serdica no está en línea   Reply With Quote
Old December 27th, 2012, 04:41 AM   #5
èđđeůx
DrEameR
 
èđđeůx's Avatar
 
Join Date: Jun 2010
Posts: 15,536
Likes (Received): 1483

Quote:
Originally Posted by Ulpia-Serdica View Post
The credit rating itself means nothing, because unlike Egypt, Greece does not borrow from the market but rather through the EFSF which is backed by the EU and is able to maintain a better interest rate. What is really hurting Greece are the austerity measures, not its borrowing costs or credit rating.
If it weren't for the EFSF Greece would be in the same boat as Egypt. Scratch that, a worse boat than Egypt. Egypt's situation is only temporary. Once things settle down regarding its new constitution and all I'm sure they'll be back to strong growth in a few years. Greece on the other hand borrowing €10-20 billion a year just to stay afloat, and seeing its economy contract year after year is going further and further into the abyss.
__________________
Èddeůx »» *
-\('o^)-
Sig Reconstruction
èđđeůx no está en línea   Reply With Quote
Old December 27th, 2012, 06:18 AM   #6
Ulpia-Serdica
ipso facto&manu militari
 
Ulpia-Serdica's Avatar
 
Join Date: Oct 2011
Posts: 7,756
Likes (Received): 3141

Quote:
Originally Posted by èđđeůx View Post
If it weren't for the EFSF Greece would be in the same boat as Egypt. Scratch that, a worse boat than Egypt. Egypt's situation is only temporary. Once things settle down regarding its new constitution and all I'm sure they'll be back to strong growth in a few years. Greece on the other hand borrowing €10-20 billion a year just to stay afloat, and seeing its economy contract year after year is going further and further into the abyss.
Most probably. Egypt is much less developed than Greece so finding areas where to create growth is much easier. It just needs to stabilize its politics and their borrowing costs. Just basic infrastructural projects should be enough to boost the GDP by a couple of %.

You fail to see that the reason why Greece is in such a bad state, is due to the fact that it is in the Eurozone, it does not have control over its monetary policy, has high production costs and low productivity and has to go through a huge austerity drive, so having the EFSF is simply the normal thing since the current mess is due to ts Eurozone membership and the fact the Eurozone was not properly constructed when introduced.

If they weren't for its Eurozone membership, the problem today would be much more resembling Latvia that has been back to growth since 2011.

FYI, the EFSF & the other mechanisms do not provide Greece with €10-20 billion a year. It has (will) refinance the full Greek debt ($250 billion) maturing in the period between 2010-2016, this way the Greek government will be able be get a low interest rate for their debt and the EU will be able to impose the needed austerity measures on the country. By 2016, the fiscal compact will be fully into place and the Greek government will be able to borrow from the markets directly.

Last edited by Ulpia-Serdica; December 27th, 2012 at 06:36 AM.
Ulpia-Serdica no está en línea   Reply With Quote
Old December 27th, 2012, 06:27 PM   #7
èđđeůx
DrEameR
 
èđđeůx's Avatar
 
Join Date: Jun 2010
Posts: 15,536
Likes (Received): 1483

Quote:
Originally Posted by Ulpia-Serdica View Post

You fail to see that the reason why Greece is in such a bad state, is due to the fact that it is in the Eurozone, it does not have control over its monetary policy, has high production costs and low productivity and has to go through a huge austerity drive, so having the EFSF is simply the normal thing since the current mess is due to ts Eurozone membership and the fact the Eurozone was not properly constructed when introduced.
This is not new. I've known this for some time now.


Quote:
FYI, the EFSF & the other mechanisms do not provide Greece with €10-20 billion a year. It has (will) refinance the full Greek debt ($250 billion) maturing in the period between 2010-2016, this way the Greek government will be able be get a low interest rate for their debt and the EU will be able to impose the needed austerity measures on the country. By 2016, the fiscal compact will be fully into place and the Greek government will be able to borrow from the markets directly.
Greece has been provided with over $100 billion by the IMF and EU to pay its creditors. They're ****ed. It will be a miracle if they can get their debt level down to 120% of GDP by 2020. Buying back their debt at lower interst rates will lighten the load considerably, but we'll see. Unlike Greece, Egypt doesn't have this massive debt burden, hasn't been in recession for 4 years, doesn't have public sector workers whose pay has skyrocketed over the decade, or widespread tax evasion that crumbled revenue, etc. It doesn't matter if they were developed or not, they'd still be in a far better position than Greece.
__________________
Èddeůx »» *
-\('o^)-
Sig Reconstruction
èđđeůx no está en línea   Reply With Quote
Old December 27th, 2012, 10:40 PM   #8
Ulpia-Serdica
ipso facto&manu militari
 
Ulpia-Serdica's Avatar
 
Join Date: Oct 2011
Posts: 7,756
Likes (Received): 3141

Quote:
Originally Posted by èđđeůx View Post
This is not new. I've known this for some time now.
Then you should understand that the EFSF (& ESM) is the natural development for the errors of the Eurozone construction.

Quote:
Greece has been provided with over $100 billion by the IMF and EU to pay its creditors. They're ****ed. It will be a miracle if they can get their debt level down to 120% of GDP by 2020.
It will because the creditors (mainly French & German banks) have agreed to write-offs once the Basel III standards are applied and these banks fullfil the criterias. (by 2018)

Quote:
Unlike Greece, Egypt doesn't have this massive debt burden, hasn't been in recession for 4 years, doesn't have public sector workers whose pay has skyrocketed over the decade, or widespread tax evasion that crumbled revenue, etc. It doesn't matter if they were developed or not, they'd still be in a far better position than Greece
Mainly because because even during the good times, the interest rate of Egyptian government bonds were sky high, so they weren't able to borrow much back then, so now when the economy is in difficulties, it is completely out of the question to go on the markets. It is not as if Egypt does not have massive tax evasion problems that date back to the time of Mubarak.

Besides Greece can also fall back on the EFSF and later on the ESM to shore up their finances. In the upcoming years, as further fiscal & banking powers are shifted to Brussels the load of the Greek debt on its economy will not be as heavy. Egypt does not have this, so it is much endangered by the markets.
Ulpia-Serdica no está en línea   Reply With Quote
Old December 28th, 2012, 12:36 AM   #9
mwanamwiwa
Registered User
 
mwanamwiwa's Avatar
 
Join Date: Sep 2008
Posts: 10,415
Likes (Received): 862

What is a EFSF and ESM?
__________________
" If you think women are the weaker sex, try pulling the blankets to your side." Stuart Turner
mwanamwiwa no está en línea   Reply With Quote
Old December 28th, 2012, 01:01 AM   #10
Azmat
Registered User
 
Azmat's Avatar
 
Join Date: Nov 2010
Posts: 17,057
Likes (Received): 1532

Egypt's crisis is only temporary and can be solved in a year with a competent leadership. Egypt does not have debt issues.
__________________
Truth is above power and the nation is above the government
- Leader of the Nation, Saad Zaghloul

█████████
Azmat no está en línea   Reply With Quote
Old December 28th, 2012, 01:19 AM   #11
Ulpia-Serdica
ipso facto&manu militari
 
Ulpia-Serdica's Avatar
 
Join Date: Oct 2011
Posts: 7,756
Likes (Received): 3141

Quote:
Originally Posted by mwanamwiwa View Post
What is a EFSF and ESM?
They are basically vehicules used to help the member states that cannot borrow on the market. It has been used by Greece, Portugal and Ireland. When they needed to refinance their debt, instead of going through the market where their yields were through the roof, they go through the EFSF which offers them a really low yield since it is backed by the EU as a whole.

It is the first steps towards Eurobonds (the European equivalent to the US Treasuries). This is basically what should have happened when the Euro was introduced:debt pooling. Unfortunately due to this error, now the less competitive countries within the Eurozone have skyrocketing yields, need to go through austerity in order to deleverage and don't have control over their monetary policy.

Quote:
The European Financial Stability Facility (EFSF) was created by the euro area Member States following the decisions taken on 9 May 2010 within the framework of the Ecofin Council. The EFSF’s mandate is to safeguard financial stability in Europe by providing financial assistance to euro area Member States within the framework of a macro-economic adjustment programme.
http://www.efsf.europa.eu/about/index.htm

Quote:
The European Stability Mechanism (ESM) is an important component of the comprehensive EU strategy designed to safeguard financial stability within the euro area. Like its predecessor – the temporary European Financial Stability Facility (EFSF) set up in 2010 – the ESM provides financial assistance to euro area Member States experiencing or threatened by financing difficulties. The two institutions will function concurrently until mid 2013 after which, the EFSF will not enter into any new programmes but will continue the management and repayment of any outstanding debt. The ESM will then remain as the sole and permanent mechanism for responding to new requests for financial assistance by euro area Member States.
http://www.esm.europa.eu/about/index.htm
Ulpia-Serdica no está en línea   Reply With Quote
Old December 28th, 2012, 01:56 AM   #12
Wust El Balad
Registered User
 
Wust El Balad's Avatar
 
Join Date: Nov 2011
Location: Near you
Posts: 5,684
Likes (Received): 2104

Quote:
Originally Posted by Azmat View Post
Egypt's crisis is only temporary and can be solved in a year with a competent leadership. Egypt does not have debt issues.
Egypt has a debt surpassing the trillion LE and each year we add up few billions in budgetary deficit.
__________________
Why so serious?
Wust El Balad no está en línea   Reply With Quote
Old December 28th, 2012, 02:11 AM   #13
Azmat
Registered User
 
Azmat's Avatar
 
Join Date: Nov 2010
Posts: 17,057
Likes (Received): 1532

Egypt's debt is not particularly high compared to other countries, it's much lower than the country's GDP and if I recall correctly 30% of it is internal.
__________________
Truth is above power and the nation is above the government
- Leader of the Nation, Saad Zaghloul

█████████
Azmat no está en línea   Reply With Quote
Old December 28th, 2012, 03:37 AM   #14
èđđeůx
DrEameR
 
èđđeůx's Avatar
 
Join Date: Jun 2010
Posts: 15,536
Likes (Received): 1483

Quote:
Originally Posted by Ulpia-Serdica View Post
Then you should understand that the EFSF (& ESM) is the natural development for the errors of the Eurozone construction.
Unfortunately. But in the end I'm sure the Eurozone nations will emerge much stronger and unified than before.



Quote:
Mainly because because even during the good times, the interest rate of Egyptian government bonds were sky high, so they weren't able to borrow much back then, so now when the economy is in difficulties, it is completely out of the question to go on the markets. It is not as if Egypt does not have massive tax evasion problems that date back to the time of Mubarak.

Besides Greece can also fall back on the EFSF and later on the ESM to shore up their finances. In the upcoming years, as further fiscal & banking powers are shifted to Brussels the load of the Greek debt on its economy will not be as heavy. Egypt does not have this, so it is much endangered by the markets.
Egypt was not manipulating its true debt like Greece pre-2008 recession though. Neither does it have a debt level well above 100% of GDP, etc. Without the EFSF Greece would default in no time. If the IMF does give Egypt a loan it has to be paid back. Greece is having the luxury of having its debt underwritten or paid at newer, much more favorable interest rates. So if anything I'd say Egypt is in the better position despite having limited oppurtunities for financing its imports and rebuilding its foreign reserves. But that's just my $0.02
__________________
Èddeůx »» *
-\('o^)-
Sig Reconstruction
èđđeůx no está en línea   Reply With Quote
Old December 28th, 2012, 01:10 PM   #15
Mister79
Registered User
 
Mister79's Avatar
 
Join Date: Feb 2007
Location: Holland, Morocco.
Posts: 10,967
Likes (Received): 1217

I am dissapointed that the US, EU etc didn't reward countries like Tunisia, Egypt etc for their democratic progress. The problems that lead to the revolutions like unemployment are still their. If the US and EU want democracy in NA to work, they need to help them and invest in them.
They promised them a lot, but not much have been done. Myanmar did only some small democratic reforms and now everybody is pumping money in them..
Mister79 no está en línea   Reply With Quote
Old December 28th, 2012, 01:18 PM   #16
Mister79
Registered User
 
Mister79's Avatar
 
Join Date: Feb 2007
Location: Holland, Morocco.
Posts: 10,967
Likes (Received): 1217

Greece will never recover. Egypt economy will recover, they need only major economic reforms just like Indonesia, Turkey etc did more than 10 years ago when they were in big financial problems.
Morsi should privatize state companies, allow investors to own companies for 100%, give permission to investors to start a business in a day or week, start major construction projects and last but not least force the army to pull back from the economy ..
Mister79 no está en línea   Reply With Quote
Old December 28th, 2012, 01:25 PM   #17
hailcaesar
Registered User
 
Join Date: Nov 2011
Posts: 29
Likes (Received): 0

Quote:
Originally Posted by Mister79 View Post
I am dissapointed that the US, EU etc didn't reward countries like Tunisia, Egypt etc for their democratic progress. The problems that lead to the revolutions like unemployment are still their. If the US and EU want democracy in NA to work, they need to help them and invest in them.
They promised them a lot, but not much have been done. Myanmar did only some small democratic reforms and now everybody is pumping money in them..
Reward Tunisia and Egypt for what, the first law the Mursi government enacted was to ban the mini skirt and the bikini "so they don’t entice the virile young Egyptian boys to rape them" that was the official statement. The flight of capital out of Egypt has began (well it started a while back) and its all headed one way into Lebanon.
hailcaesar no está en línea   Reply With Quote
Old December 28th, 2012, 04:52 PM   #18
Azmat
Registered User
 
Azmat's Avatar
 
Join Date: Nov 2010
Posts: 17,057
Likes (Received): 1532

Quote:
Originally Posted by hailcaesar View Post
Reward Tunisia and Egypt for what, the first law the Mursi government enacted was to ban the mini skirt and the bikini "so they don’t entice the virile young Egyptian boys to rape them" that was the official statement. The flight of capital out of Egypt has began (well it started a while back) and its all headed one way into Lebanon.
What kind of bullshit is this, neither of them are banned and I challenge you to find one credible source that proves otherwise.
__________________
Truth is above power and the nation is above the government
- Leader of the Nation, Saad Zaghloul

█████████
Azmat no está en línea   Reply With Quote
Old December 28th, 2012, 05:48 PM   #19
dexter159
The conspirator
 
dexter159's Avatar
 
Join Date: Dec 2010
Posts: 6,275
Likes (Received): 750

Quote:
Originally Posted by Mister79 View Post
I am dissapointed that the US, EU etc didn't reward countries like Tunisia, Egypt etc for their democratic progress. The problems that lead to the revolutions like unemployment are still their. If the US and EU want democracy in NA to work, they need to help them and invest in them.
They promised them a lot, but not much have been done. Myanmar did only some small democratic reforms and now everybody is pumping money in them..
You believe this shit? The only democracy they believe in is the democracy of free markets as if anything can be bought and sold , you want a new law pay a lobby group and get it done ! That's the US democracy , they won't even fund or help any other shit if it is not in their interest , instead they will give you IMF loans to enslave the shit out of your country .
__________________


Free 21 days EvE online trial
--------------------------------------------
It is well enough that people of the nation do not understand our banking and monetary system,
for if they did, I believe there would be a revolution before tomorrow morning.
Henry Ford


dexter159 no está en línea   Reply With Quote
Old December 28th, 2012, 07:07 PM   #20
Mister79
Registered User
 
Mister79's Avatar
 
Join Date: Feb 2007
Location: Holland, Morocco.
Posts: 10,967
Likes (Received): 1217

Quote:
Originally Posted by dexter159 View Post
You believe this shit? The only democracy they believe in is the democracy of free markets as if anything can be bought and sold , you want a new law pay a lobby group and get it done ! That's the US democracy , they won't even fund or help any other shit if it is not in their interest , instead they will give you IMF loans to enslave the shit out of your country .
It is in the interest of the US that Egypt stays stabile and that democracy their works, because of Israel, Suez Canal etc

The US helped many Asian countries after WWII to develop their economies so that they don't become communist countries.
They need now to help countries like Tunisia and Egypt with investments, economic reforms etc so that this countries become wealthier and succesfull democracies.
Un unstabile Egypt isn't good for the EU, US, Israel, region interests etc
Mister79 no está en línea   Reply With Quote


Reply

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off



All times are GMT +2. The time now is 08:49 AM.


Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2014, vBulletin Solutions, Inc.
Feedback Buttons provided by Advanced Post Thanks / Like v3.2.5 (Pro) - vBulletin Mods & Addons Copyright © 2014 DragonByte Technologies Ltd.

vBulletin Optimisation provided by vB Optimise (Pro) - vBulletin Mods & Addons Copyright © 2014 DragonByte Technologies Ltd.

SkyscraperCity ☆ In Urbanity We trust ☆ about us | privacy policy | DMCA policy

Hosted by Blacksun, dedicated to this site too!
Forum server management by DaiTengu