Xinhua, Cairo :
The Egyptian economy is still struggling with trade and budget deficits as well as upcoming unpaid dues despite the improvement of the country’s credit rating and the decline of its external debts, said Egyptian economic experts.
The Central Bank of Egypt (CBE) has recently announced the decline of Egypt’s foreign debts to 41.3 billion US dollars in the second quarter of the 2014/2015 fiscal year compared to 44.8 billion dollars in the first quarter of the same year.
“The Egyptian authorities have recently paid off about three billion dollars of its dues to the external world (in the form of bonds and deposits), which affirms the commitment and ability of the Egyptian economy to pay off its foreign obligations when due,” the CBE explained in a recent press release.
Egyptian economic experts, however, believe that the country’s economy is still ailing as the payments of foreign debts mainly came from financial aids worth billions of dollars.
“The issue is that the payment of our debts came from interest- free deposits of Gulf states, not from real domestic resources made inside the country,” said Ibrahim Nawwar, economic expert and former spokesman of the Egyptian industry and foreign trade ministry.
Payment of foreign debts would indicate real economic progress if it was made through real dollar resources, particularly direct foreign investment or extra exports, but the case is different because Egypt suffers insufficient foreign investment besides a trade deficit, Ibrahim told Xinhua.
The most populous Arab country suffers a budget deficit of about 31.5 billion dollars for the 2014/2015 fiscal year, representing 10 percent of the gross domestic product, which the government attempted to minimize through economic reforms including large energy subsidy cuts that led to price hikes in oil products and electricity.
“Despite the economic policy based on austerity and subsidy cuts, the improvement of foreign debts is merely a number as it is based on financial aids rather than economic development,” Nawwar told Xinhua, describing the general economic condition as “alarming.”
The Egyptian economy is still struggling with trade and budget deficits as well as upcoming unpaid dues despite the improvement of the country’s credit rating and the decline of its external debts, said Egyptian economic experts.
The Central Bank of Egypt (CBE) has recently announced the decline of Egypt’s foreign debts to 41.3 billion US dollars in the second quarter of the 2014/2015 fiscal year compared to 44.8 billion dollars in the first quarter of the same year.
“The Egyptian authorities have recently paid off about three billion dollars of its dues to the external world (in the form of bonds and deposits), which affirms the commitment and ability of the Egyptian economy to pay off its foreign obligations when due,” the CBE explained in a recent press release.
Egyptian economic experts, however, believe that the country’s economy is still ailing as the payments of foreign debts mainly came from financial aids worth billions of dollars.
“The issue is that the payment of our debts came from interest- free deposits of Gulf states, not from real domestic resources made inside the country,” said Ibrahim Nawwar, economic expert and former spokesman of the Egyptian industry and foreign trade ministry.
Payment of foreign debts would indicate real economic progress if it was made through real dollar resources, particularly direct foreign investment or extra exports, but the case is different because Egypt suffers insufficient foreign investment besides a trade deficit, Ibrahim told Xinhua.
The most populous Arab country suffers a budget deficit of about 31.5 billion dollars for the 2014/2015 fiscal year, representing 10 percent of the gross domestic product, which the government attempted to minimize through economic reforms including large energy subsidy cuts that led to price hikes in oil products and electricity.
“Despite the economic policy based on austerity and subsidy cuts, the improvement of foreign debts is merely a number as it is based on financial aids rather than economic development,” Nawwar told Xinhua, describing the general economic condition as “alarming.”
