In light of the Corona pandemic and following up on the symptoms of the disease on the global and Egyptian economies, and after 4 consecutive months the crisis reached its peak and we are still at the center of events and the effects continue, we will review in Egypt the state of public debt and the principle and philosophy of entering into borrowing and asylum in the last period to use 10 billion dollars of Reserve with borrowing up to $ 8 billion and put up $ 5 billion in bonds? Everyone is asking about the situation? Where is the compass? What are the risks and challenges? In order to clarify an opinion on this matter, before explaining this issue which has very many aspects, let me just emphasize the following postulates:
1 – In discussing this important issue, no one who supports loans is drunk or with the regime, and no one is against loans, objector or opponent, or against the regime, because this point has become a very thorny issue in discussing all of our issues … and the social media is full of soft eyes, which are understood between The lines of discussion of the cases are wrong and only the national bonds are distributed to themselves and their families.
2 – Borrowing and credit financing are economic and commercial principles that are well known and recognized in the world of finance and business. For example, any trader or any investor working for him and him, the idea is not rejected because there is a big difference between the savings or the treasure .. and the merchant !! ,, But we always evaluate the case of the merchant’s affection and his good management in managing the debt of others and collecting his external debts with others and maintaining balanced cash flows in a way that guarantees him the sustainability of life and the development of his business provided that he has muscles and the ability to pay and the commitment to maintain his reputation with traders in local markets the world
we finished this introduction to talk about our topic in Egypt ,,,
1. assess the sensitivity and seriousness of the debt: –
External debt is close to 120 billion dollars at the end of May 2020, and the internal 4.2 trillion pounds in total, I see that we have almost surpassed the debt size barrier as a total of 90% of this GDP, according to the report of the Central Bank of Egypt issued in April 2020, but the reference in it to December 2019 ,, So after the update, and in light of Corona’s losses, I expect the public debt to reach 100% of the GDP.
From this angle and this point related to the size of debt, we can say that rates were reached on the edge of risk compared to international standard rates, meaning that the gains we have provided in the last 5 years in the results of economic reforms in relation to reducing public debt are appropriate for GDP, and in this regard we almost We achieve an approximate ratio of 85% of the public debt to the gross domestic product of Egypt by the end of the 2019/2020 budget
2- I imagine that this year and next year, Egypt has obligations to spend in addition to paying previous debts with interest, including what is scheduled and some of which is withdrawn in the previous five years, and there are benefits that will make there a great difficulty in managing the country’s cash flows to cross this important stage, which will affect me The life and movement of the economy for all, and what will multiply its severity is that the citizen who was the hero of the epic five years in transit in the course of economic reform did not wear a sigh of relief unless the pandemic and the size of economic changes came over the size of its absorption and the rates of poverty and the melting of the middle classes will begin to return, It will lose at least 150 billion pounds of gross domestic product, and it must also pump approximately 200 billion pounds other than the 100 billion pounds that it had monitored at the beginning of the pandemic to preserve the quantitative flow of the economy and keep it from stagnating. In my opinion, the most difficult process to come is Managing Egypt’s cash flows in this crisis.
3 – If we assess the situation in terms of covering state expenditures in the next budget in light of the weak revenues affected by tax revenue, which is the main budget artery that will, of course, be negatively affected by the movement of the economy, as well as other sources of revenue such as the Suez Canal income, tourism, and Egyptians’ remittances abroad and attracting foreign investments, this will confirm that we We do not have any solutions, whether external borrowing. Here, if we agree on the principle, we will move to other technical points related to the size and method of the loan, its terms and years, repayment systems, the size and value of dollar bonds to be offered internationally and the rate of return on them according to the proposed term. This is an important element and all of them are very important technical elements that will show skill and honesty And the accuracy of geniuses in financial and monetary management and state planning, austerity for government expenditures is an unavoidable imperative.
4- The scientist who witnessed the Great Depression 100 years ago and now called him great isolation, so everyone has a state represented by the government and people in both its private and public sectors, the formal and informal economy, they must absorb the challenge and the government must know that it is in front of a statement of Marathon’s chronic assumptions that started Sixty years ago, as a result of decisions or directions of services on the account of productivity and recreation at the expense of service, etc., so hope is hoped to borrow in order to develop real agricultural and industrial production, foreign trade and export quickly, precisely and with high quality, otherwise you will enter into multiples of the size of the public debt in a way that complicates your political position In the circles of global decision-making, especially since Egypt is working now and its leadership does not sleep around the clock in light of geopolitical challenges and conditions not witnessed in its recent history
Conclusion: –
Loans at this time are a necessary evil for every one of us, government and people need to express concern and mobilize their forces and think well until we return to the pre-pandemic and take the path of return towards reducing the proportion of public debt appropriate to the gross domestic product and this equation will only be achieved by stopping borrowing with Obligation to pay. , Double production and export, and strengthen dollar sources for internationalization from unconventional sectors and diversity in modern economies …
– Public health economics and education – participatory economics – knowledge and digital
economics – economics of the fourth industrial revolution and artificial intelligence in medicine, medicine, and drug research
Written by: Dr. Yousry El Sharkawy
, International Investment Advisor,
President of the Egyptian African Businessmen Association (EABA)
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