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Thursday, 3 October 2019

Investors fear protests could undermine economic reforms

Some investors fear walk-back of economic reforms: Investors are concerned that the Egyptian government could resort to populist measures in response to the recent protests — measures that could derail progress on economic reform, Reuters reports. The story comes after the Supply Ministry on Tuesday announced that it would return 1.8 mn people to the subsidy rolls, a move which some have framed as an attempt to assuage economic discontent. A continuation on this path, analysts say, threatens to undermine the stabilizing measures undertaken over the past three years.

What they’re saying: “Investors are wary of the risk of fiscal slippage through the reversal of subsidy reforms or raising spending on public sector wages or cash transfers,” said Farouk Soussa, senior economist with Goldman Sachs, told Reuters. “The main risk is that any fiscal slippage could reduce the likelihood of Egypt coming to an agreement with the IMF over a new deal after the current one expires in November.” Ricciardo Fabiani, North Africa project director at the International Crisis Group, told Bloomberg that anything more than adjustments to the subsidies system risks increasing instability and scaring investors away from the country.

Ration card value to double: In other news, the House of Representatives will introduce draft legislation to double the value of ration cards to EGP 100 per person “as a gift from parliament to the great Egyptian people,” Deputy House Speaker Soliman Wahdan said, according to Al Masry Al Youm. Wahdan said he will try to speed up parliamentary discussions on the topic as well as coordinate with the supply and finance ministries so that the legislation can be passed as quickly as possible.

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