Dear followers everywhere, welcome to a new analysis of the most important reports and events presented by the Banker Research Unit throughout the day, Saturday, March 30, 2024..
Starting with the most important event today, the International Monetary Fund’s decision to approve the new increase in the Egyptian loan, which finally reached $8 billion.
The report revealed the impact of adopting the IMF loan on the Egyptian economy and on the price of the dollar in the coming days after the floatation decision.
The report added that the Fund’s decision serves as a certificate of confidence for the national economy and will create a strong movement in foreign direct investments. In conjunction with the Fund’s approval, we can say now that there is no such thing as a black market. All transactions are done through banks.
Regarding the fate of the dollar price, the Central Bank’s decision to liberalize the exchange rate on March 6 came at the right time. This decision means that the exchange rate is subject to the forces of supply and demand. This means that one time we may see the dollar going down and the other time we will see it rising. And we will tell you an important number, which is that the National Bank The Bank of Egypt has collected more than two billion dollars in concessions, whether from individuals or companies, and there is no doubt that the IMF’s decision will contribute to the decline in the price of the dollar in banks in the coming days with the availability of new resources.
The next report in today’s analysis is from the European Union, which decided to break the laws for the sake of Egypt.
The report highlighted the visit of a large number of European leaders to Egypt a few days ago, and Europe announced at that time that it would raise relations with Egypt to the level of partnership and also allocate about 8 billion dollars to Egypt in the form of grants, aid, and soft financing.
Regarding what is new in the file of cooperation with Europe, it was announced
Today, the President of the European Commission, Ursula von der Leyen, announced an exceptional measure for Egypt that is not usual in the corridors of the European Union. She said that the European Union decided to expedite some of the financial aid allocated to Egypt, and this is by using an urgent financing procedure that bypasses parliamentary oversight and other guarantees… and take care of the phrase Bypassing parliamentary oversight and other guarantees, this means that the union decided to disburse aid to Egypt without allowing the rest of the legal procedures in the union’s charter, and this is a very rare thing to happen.
Regarding the value of the amount that the European Union will urgently disburse to Egypt, the American Associated Press news agency said that Europe will disburse an amount of one billion euros, equivalent to 1.1 billion dollars, and this is part of the aid package of seven billion and 400 million euros, equivalent to ($8 billion) directed to Egypt that was announced. Reported by the European Union on March 17th.
The American agency explained the reasons for Europe’s acceleration of aid to Egypt due to Europe’s fear and anxiety about the increasing economic pressures on Egypt, the impact of regional conflicts, and the fear of the explosion of illegal immigration waves of immigrants from the region to the shores of Europe, especially since Egypt is accommodating millions of immigrants and refugees, and if any increased pressure on Egypt occurs, it will increase. The possibility of European shores receiving millions of immigrants.
We are still with you for another analysis today, Saturday, and we have an important report presented by the Banker Research Unit regarding a global project being implemented between Egypt and Saudi Arabia.
The beginning was an announcement by Saudi sources that the Italian company Prizman had begun installing the submarine cable for the electrical connection between Egypt and Saudi Arabia and had begun lowering the cable under the waters of the Red Sea.
According to available information, the length of the submarine cable exceeds 20 kilometers, and the cable route was modified so as not to harm the environment or coral reefs. The total cost of installing the submarine cables is 220 million euros. Keep in mind, this is the installation cost, but not the cable itself.
The report said that the installation of the giant submarine cable between Egypt and Saudi Arabia is part of a huge electrical interconnection project between the two countries, which includes the establishment of 3 high-voltage transformer stations in eastern Medina and Tabuk in Saudi Arabia, and the Badr station in Cairo, and the stations are connected by overhead transmission lines with a length of up to 1,350 kilometers. And submarine cables in the Gulf of Aqaba exceeding 20 kilometers as part of a package of submarine cables between the two countries in the giant project.
The report revealed that the cost of implementing the electrical interconnection project between Egypt and Saudi Arabia, with a total capacity of 3,000 megawatts, will reach $1.8 billion.
The last report with us in today’s analysis regarding the hot money trap and the mistake the government made in the recent dollar crisis..
The report reminded us of what happened after the outbreak of the Russian-Ukrainian war and the exit of a large amount of foreign exchange that amounted to more than 20 billion dollars in hot money. This, of course, caused a major crisis because Egypt was dependent on these funds except for its cash reserves, and for this reason, more than one official appeared. Among them, the Minister of Finance and the Prime Minister admitted the mistake of relying on hot money and said that this will never happen again in the future and that it is the reason for the dollar gap and the emergence of the black market for the currency.
The report explained that hot money has some advantages, including that it provides dollar liquidity that supports the cash reserve of foreign currencies in the central bank, but unfortunately it has more disadvantages, and from its name, you can know that it is money that can leave the country at any time, and the central bank, in accordance with international laws and agreements, is obligated to provide it to investors in Anytime they ask for it…
In short, this means that this is liquidity that is not yours and you cannot build any economic plans on it, because its owner has the right to request it at any time, and with the first crisis or economic shock, this money leaves the country immediately.
The report also revealed that after the Central Bank’s decision to raise the interest rate by 6% and a significant decline in the value of the Egyptian pound in banks and exchange companies, Egypt is now offering one of the highest yields on bonds in the local currency, and this has once again raised expectations about the return of hot money to Egypt…and this, of course, has brought back We remember the crisis and the big dilemma that the government fell into, which should not be repeated again.
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