Egypt's foreign exchange reserves were up very slightly in June, reaching
US$15.5 billion. External debt was US$33 million in March (the latest figure
issued).
But few Egyptian economists have taken comfort from these figures. Bearing in
mind that foreign exchange reserves were US$36 billion in late 2010, the new
figures merely show the depth of Egypt's problems and the urgent need to
generate
more foreign income and foreign direct investment.
There are few indications of internal performance but one potentially
significant one is a drop in demand for steel. Suez Canal revenues are still
below 2011
levels, affected by the slowdown in the world economy and troubles in the EU.
The head of Egypt's tourism authority is seeking an urgent meeting with Morsi to
persuade him to take early action to boost tourism. Numbers are improving but
are well below 2011 figures and concern about criminality is deterring high
spending visitors from the Arab world. Ramadan, which starts at the end of next
week,
usually provides a short-lived but important economic stimulus.
Another big issue that will have to be tackled – but may have to wait until
there is a new parliament – is the question of subsidies. The current budget
would
see significant cuts, which all know are needed but would hit people hard and
make whoever implements the measures deeply unpopular. It seems likely that
President Mohammed Morsi's government will find a way of stopping the cuts or leaving the decision until
after parliamentary elections.
For more news and expert analysis about Egypt, please see Egypt Politics & Security.
© 2012 Menas Associates