Egypt risk: Alert – Watching and waiting- EIU
As the political instability of Egypt’s transition continues, the uncertainty is having a serious impact on the economy and foreign investment,the Economist Intellegence Unit (EIU)says.
Source : https://www.marocafrik.com/english/Egypt-risk-Aler...
Egypt Central Bank figures for the end of March 2012 showed that foreign exchange reserves had fallen to US $15.12 billion from US $15.72 billion in February and US $33.6bn at the start of 2011.The Central Bank has preffered to draw down on its reserves rather than print money but it now leaves Egypt with less than 3 months worth of import cover.The bank has lowered the capital reserve deposit requirements for banks from 14% to 12% to boost lending to the government and private companies.
The longer the political uncertainty persists FDI will remain minimal and the greater the return on the reserves.Investors will not commit to the country unless this is resolved. There was an outflow of US$482.7m in FDI in 2011 as against a positive figure of US$380.9m in the second half of 2010.
The confrontation between the Musllim Brotherhood's FJP party and the Supreme Military Council (SCAF) has prevented the emergence of a clear economic policy and tehre is no coordinated policy development. Many long term expatriates are leaving which is a bad sign the EIU says. Corruption allegations about contracts agreed under the previuos regime are discouraging potential investors who cannot rely on agreements being honoured. Real Estate business has ground to a halt.
Bureaucratic and administrative inefficiency is resulting in contract cancellations because there are so many parties involved companies do not know who to talk to ingovernment to move business forward. Corruption is increasing and there is no transparency, there is no control. The division between the FJP and SCAF has also affected the negotiations for the IMF loan for US $3.2 billion do although the EIU thinks that the loan agreement will now move ahead and the drafting of a new constitution and the election of a new president should bring some stability in the months ahead which commentators hope will boost activity.
Secular parties have complained about the dominance of the FJP and the al-Nour party in the parliament and the 100 member constitutional panel dominated by the islamists because secular parties, Al Azhar University and the Cpts have all withdrawn from it. The panel has now been suspended by a court order and SCAF is playing off one party against another. The Muslim Brotherhood's decison to field a presidental candidate having said they would not ,has been seen as a threat to the diverse nature of Egyptian society. Unless the FJP compromises with secularists and the nationalst's things will go from bad to worse,a commentator says. The Muslim Brotherhoods increasing confrontation with SCAF does not bode well so there are deep divisions and no clear way ahead.
Whilst investors try to remain optimistic there is little chance that Egypt will return to being a magnet for FDI anytime soon.The danger of continuing economic and political disorder and division in a nation of 80 million are very great for Egypt and the region.
The Muslim Brotherhood and Salafist groups held a mass demonstration against the presidential candidacy of former security chief Omar Suleiman and other Mubarak era candidates on Friday, AFP reported.
On 20 April secular groups will demonstrate against islamist monoipolisation of the democratic process in Egypt and they will aslo protest on the candidacy of former regime members.
The longer the political uncertainty persists FDI will remain minimal and the greater the return on the reserves.Investors will not commit to the country unless this is resolved. There was an outflow of US$482.7m in FDI in 2011 as against a positive figure of US$380.9m in the second half of 2010.
The confrontation between the Musllim Brotherhood's FJP party and the Supreme Military Council (SCAF) has prevented the emergence of a clear economic policy and tehre is no coordinated policy development. Many long term expatriates are leaving which is a bad sign the EIU says. Corruption allegations about contracts agreed under the previuos regime are discouraging potential investors who cannot rely on agreements being honoured. Real Estate business has ground to a halt.
Bureaucratic and administrative inefficiency is resulting in contract cancellations because there are so many parties involved companies do not know who to talk to ingovernment to move business forward. Corruption is increasing and there is no transparency, there is no control. The division between the FJP and SCAF has also affected the negotiations for the IMF loan for US $3.2 billion do although the EIU thinks that the loan agreement will now move ahead and the drafting of a new constitution and the election of a new president should bring some stability in the months ahead which commentators hope will boost activity.
Secular parties have complained about the dominance of the FJP and the al-Nour party in the parliament and the 100 member constitutional panel dominated by the islamists because secular parties, Al Azhar University and the Cpts have all withdrawn from it. The panel has now been suspended by a court order and SCAF is playing off one party against another. The Muslim Brotherhood's decison to field a presidental candidate having said they would not ,has been seen as a threat to the diverse nature of Egyptian society. Unless the FJP compromises with secularists and the nationalst's things will go from bad to worse,a commentator says. The Muslim Brotherhoods increasing confrontation with SCAF does not bode well so there are deep divisions and no clear way ahead.
Whilst investors try to remain optimistic there is little chance that Egypt will return to being a magnet for FDI anytime soon.The danger of continuing economic and political disorder and division in a nation of 80 million are very great for Egypt and the region.
The Muslim Brotherhood and Salafist groups held a mass demonstration against the presidential candidacy of former security chief Omar Suleiman and other Mubarak era candidates on Friday, AFP reported.
On 20 April secular groups will demonstrate against islamist monoipolisation of the democratic process in Egypt and they will aslo protest on the candidacy of former regime members.
Source : https://www.marocafrik.com/english/Egypt-risk-Aler...