Capital Market & Stock Exchange Committee

• Egyptian economy between a rock and a hard place - November 2001
• Is the Egyptian economy turning the corner? - February 2001
• Is the Egyptian economy turning the corner? - January 2001

Egyptian economy between a rock and a hard place

Committee chair Mohamed Taymour and co-chair Nevine El Tahry chaired a discussion on November 11 entitled "Egyptian economy between external shocks and internal management: a formal look." Guest speaker Mahmoud Mohieldin, senior adviser to the minister of economy & foreign trade, spoke about the shocks which Egypt has been exposed to during the last 20 years and their effect on the economy with regard to balance of payments, trade balance, current account and capital account.

Studies that cover these issues have been conducted by the Ministry of Economy, the Ministry of Planning, the Central Bank, investment banks, the World Bank and the IMF. Mohieldin said the government has acknowledged that the economy is being hit hard by the September 11 attacks. The aforementioned ministries and agencies have therefore suggested long- and medium-term strategies, including more flexibility in monetary policy, structural reform and compensatory measures, to address the situation.

Mohieldin summarized the three main approaches being followed in order to face the current crisis as monetary, fiscal and structural/institutional reforms. These measures will take place within three sectors: the governmental sector, private sector and consumer sector.

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Is the Egyptian economy turning the corner?

Dr. Mahmoud Mohieldin, senior adviser to the minister of economy & foreign trade, and Dr. Mahmoud Abul-Oyoun, deputy governor of the Central Bank of Egypt, tackled the discussion topic, "Is the Egyptian economy turning the corner?" The event, held February 27 and organized by AmCham’s Capital Market & Stock Exchange Committee, drew candid remarks from both experts.

Dr. Mohieldin, professor of economics at Cairo University, spoke about the negative reactions from sovereign rating agencies, attributing Standard & Poor’s downgrade of Egypt 10 months ago to concerns about currency "fiscal slippage" and economic reform. During his talk, he also highlighted uncertainties regarding Egypt’s currency and exchange-rate mechanism, economic performance and the pace of economic reform with an emphasis on privatization.

Regarding changes in the currency-exchange rate, he said that this made the economy more investor friendly. Since the policy’s implementation, "importers are suffering less."

Dr. Mohieldin went on to discuss the postponements of recent privatization efforts due to external factors, like poor worldwide telecom-stock performances and political unrest in Palestine. He said that despite "solid fundamentals," there is a problem of perception from abroad that is even more important than the facts on the ground.

Despite the negative perception, Dr. Mohieldin said that "imports are declining and exports are rising which is a very good sign for the balance of trade. The fundamentals of the economy are good. The economic indicators were negative in 1997 and 1998, but not now."

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Is the Egyptian economy turning the corner?

Dr. Mohamed Taymour and Ms. Nevine El Tahry, chair and co-chair of the Capital Market & Stock Exchange Committee, conducted a panel discussion on January 23 at the Conrad Hotel to consider the question, "Is the Egyptian economy turning the corner?" Dr. Taymour asked members to point out issues that impede Egypt's economic progress and come up with practical solutions to overcome them.

Among the subjects discussed were monetary policy, the rationale for determining prices, the problem of unemployment and ways to protect lending institutions in order to help stimulate investment. The committee also touched on transparency issues, the need for long-term government planning and the practice of using interest rates to defend the exchange rate. Looking at some of Egypt’s strengths, the committee noted the anticipated signing of the partnership with the European Union, Egypt's inclusion on the Morgan Stanley emerging-markets index and recent natural-gas finds, along with the potential for growth in tourism.

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