Amr Adib hosted 10 members of the business community last night on Kol Youm to discuss the impact of the EGP float, and all of them are complaining of growing debts that they are unable to repay because of the devaluation.
Most of the complaints appear to stem from banks not refinancing temporary overdrafts on their LCs, as instructed by the CBE, a complaint we’ve been hearing frequently of late. Five Stars Feed, Mills and Animal Produce Company chairman Mahmoud El Shorbagy, said his sector has lost EGP 1.2 bn so far and has had to cut production by 50%. “Some banks have frozen our accounts on grounds of exceeding our legal limit,” El Shorbagy said. “Some banks have stopped dealing with us altogether.” He added that the government must meet with representatives from the sector to hear their problems and discuss possible solutions (watch, runtime 1:39).
Domty CEO Mohamed El Damaty, also the head of the food industries division at the Egyptian Federation of Industries, told Adib in a call-in that Egyptian companies will bear a collective loss of EGP 70 bn in 2016 on the back of an import backlog worth USD 6.5-7 bn (watch, runtime 2:19).
We’ve noted earlier this month that over 100 importers have signed a memo to the prime minister and CBE governor calling for them to step in and save them “from bankruptcy,” with some 65 companies reportedly owing banks EGP 4.6 bn. This issue has been receiving widespread coverage in the local press last night.
Adib is also back to taking aim at the judiciary, calling for the government to prioritize reforming the justice system in Egypt (watch, runtime 7:50).
Ibrahim Eissa was equally concerned with the economy last night and held his weekly Wednesday debate, this time with the former Egyptian Private Equity Association head Hany Tawfik and Al Ahram Chairman Ahmed El Sayed El Naggar on how the float has impacted the economy. Tawfik said it is still too early to judge but that initial indications are positive, pointing to foreign appetite for both Egyptian shares and FDI opportunities. He added that price increases were expected and that Egyptians now need some belt-tightening (watch, runtime 2:33).
On the other side of the fence, El Naggar indulged his inner Nasserist, saying it’s too early to say anything about the investment outlook and mumbling something our not knowing how things are looking until the government issues an official statement on the floatation “helping or harming” foreign direct investment. What’s more, foreign buying on the EGX is a “loss” for Egypt “because these stocks are worth more than what they are going for.” El Naggar said that the only immediate effect from the float was “higher prices for consumers” and ballooning inflation rates (watch, runtime 2:38).
Yahduth fi Masr’s Sherif Amer was optimistic last night about prospects for the return of Russian tourists, saying President Abdel Fattah El Sisi’s phone call with his Russian counterpart was the first step in the resumption of flights between Moscow and Cairo.
Lamees El Hadidy was off the air last night.