YOUR DOLLAR FOR EGYPT: AN INITIATIVE TO SAVE THE EGYPTIAN ECONOMY
Over the last year,Egypt lost more than 15 billion dollars of foreign exchange reserves, and the proceeds of tourism also dropped by one-third from peak levels. Further, inflows of foreign investment during 2011 recorded a big zero as no single dollar enteredEgypt. And despite the promises of some Arab and foreign governments to provide financial assistance to the Egyptian Government in the form of grants and loans (The Group of Eight promised to offer 35 billion dollars for the Arab Spring Nations:Egypt,Libya andTunisia. SomeGulf States announced offering 10.5 billion dollars as well), nothing of such grants and loans arrived inCairo except for one billion dollars from the Governments of Saudi Arabia andQatar. On the other hand, Egyptian, Arab and foreign capital assets have been smuggled fromEgypt in the past year, either due to the systematic plunder of the Egyptian people’s funds, or through legitimate channels such as foreign investors in the Egyptian stock market or USD treasury securities.
The aforementioned lines lead us to search for solutions and alternatives to get out of the economic predicament thatEgyptis going through now; especially thatEgypt’s global credit rating is dropping month after another. This means that the external image ofEgypthas become negative towards our economy, in the sense thatEgyptwill be unable to repay its debts abroad. This is what international financial institutions allege and circulate about the Egyptian economy, and thusEgyptgets loans with high interest rates (local banks lent to the Government of Al-Ganzouri with high interest rates on the pretext of this rating). In contrast, the Government of Al-Ganzouri announced that the budget deficit will rise from 134 to 185 billion Egyptian pounds, and that part of this deficit will be managed through international borrowing from Egyptian banks, whereas the rest will be managed through borrowing 12 billion dollars from abroad.
It is noteworthy in this context that the International Monetary Fund’s mission will arrive inCairowithin days to discuss lendingEgypt3.2 billion dollars, with difficult conditions, as declared by Dr. Al-Ganzouri, such as reducing the exchange rate of the Egyptian pound. Apparently, it is the citizens that are going to pay the cost of this decision when the prices of goods in markets rise above their income. Certainly, the loan that the Government wants from abroad is the largest in the history of the Egyptian Government which has committed, since 1990, not to increase the foreign indebtedness and resorted to domestic debt. It is also certain that if we get this loan, our debts will rise to large proportions and we would enter the cycle of ongoing deficit. Hence, if we manage to pay the deficit in the current budget though external borrowing, then what about the coming years in which our conditions will not improve quickly! Furthermore, with such huge indebtedness we heap a heavy burden on the generations to come.
In the following lines I put forward an envision (an initiative) to get out of this predicament with the least amount of loss. The initiative I am launching will be directed mainly to the Egyptians working abroad, who are estimated, according to the official statistics, at ten million, and the proportion of workers among them is 65% (i.e. 6.5 million Egyptians). Those workers have regular incomes and they are patriots par excellence as well. They love Egyptand are impressed by the revolution of its youth and they have a keen desire to assist their homeland, but how?! My initiative is based on inviting those Egyptians living abroad, on the upcoming 25th of January, on the occasion of the first anniversary of the glorious revolution, to deposit – each of them – the amount of one thousand dollars in their personal account in Egyptian banks.
Taking into account the following considerations:
1- The 25th of January is a significant date, however, every Egyptian abroad has the right to choose any date in January, according to his/her circumstances and the nature of his/her income, to deposit the required amount of money.
2- The deposited amount of money maybe lessened, according to the economic conditions of every Egyptian, and can yet be raised dozens of times. However, we estimate the average amount by a thousand U.S. dollars.
3- The amount of money deposited in the personal account in Egyptian banks is not a donation from Egyptians abroad but is a deposit in the personal account of the depositor.
4- This amount of money is stipulated not to be affected by the total of the usual remittances sent by every Egyptian to his/her account. In other words, this amount of money should be, as convenient, a proportion of any excess private savings, especially of Egyptians working in European and American countries.
5- This amount of money will be a deposit for a year, during which it cannot be withdrawn, so as to lend it to the Egyptian Government.
6- The remittance proceeds are expected in this day (or week) to reach almost six billion dollars, and then the Central Bank ofEgyptwill issue USD treasury securities (bonds) to borrow those six billion dollars from local banks where such funds were deposited.
In order to achieve the desired success of this idea, we – through this initiative – call upon Dr. Al-Ganzouri and his Government and the governor of the Central Bank ofEgyptto consider the following suggestions:
1- Issuing a bi-monthly statement about the expenditure of this amount of money, so that the Egyptians abroad would trust the initiative and satisfy themselves that they have served their homeland.
2- The Central Bank of Egypt vows not to finance any provocative importing operations and the importation of luxury goods such as Mercedes and BMW cars, pets’ food, saumon fumé (smoked salmon) etc….
3- Non-allocation of those billions to finance the operations of fund transfer for senior businessmen inEgypt, Arabs and foreigners, who are seeking an opportunity to smuggle their money.
4- Compelling the Minister of Supply to buy wheat from outsideEgyptdirectly, without mediators, as it is not conceivable for brokerage operations to remain so far and after the revolution to import wheat from abroad in such a way that increases the cost of imports.
If the International Monetary Fund will impose its conditions for the Egyptian Government, and the Government of Al-Ganzouri will be obliged to consent, then we think that our government’s compliance with the aforementioned controls of the initiative is more worthy, especially if Egyptians abroad transfer six billion dollars funds without conditions putting pressure on the Egyptian pound. Add to that that if the Egyptian Government agrees to such controls, we would give a second call for Egyptians abroad to repeat this deposit operation within six months. If this happens, the government would have blocked the budget deficit without foreign pressure, but through its children. With the implementation of this initiative, the Egyptian Government and people will reap a large number of advantages.
The expected positive results would be – to name but a few:
1- An increase in the rate of the Egyptian pound against the U.S. dollar exchange rate.
2- An increase in foreign exchange reserves in the Central Bank ofEgyptfrom 20 to 26 billion dollars.
3- A rise in the global exchange rating ofEgyptfollowing the increase of its cash reserves.
4- An increase in the capacity of the government to cover the main needs of food to six months instead of four months now.
5- The provision of internal opportunities for lendingEgypt, but with better conditions in terms of duration and return on lending.
6- The availability of dollar liquidity in markets, the thing that will not create a black exchange market for the dollar.
We do hope that Dr. Al-Ganzouri would adopt the initiative and work on activating it, and yet to be launched in a large-scale press conference so as to get the message across to all the Egyptians abroad.
P.S. For those interested in the idea, a Facebook page has been created for the campaign: https://www.facebook.com/groups/318431288177731/. Please participate and interact. All the best forEgypt.