Egyptian Chronicles: And "it" hit the fan finally !! "Updated"

Thursday, November 3, 2016

And "it" hit the fan finally !! "Updated"

And you know "it" hit the fan finally.
The Central Bank of Egypt "CBE" issued its decision early Thursday to freely float the Egyptian pound and raise the key interest rates as part of the government's economic reforms.
In its statement issued earlier , the CBE announced that it temporarily devalued the Egyptian currency by 48 percent to LE 13 to the dollar.
Egyptian bank
Taken earlier Thursday in some Egyptian bank
in Cairo "Reuters" 

It is up to the banks move the price of the dollar to within a10-percent margin above and below the above-mentioned exchange rate until the next exceptional forex auction .

Since then the prices at the Egyptian banks including the ones I know whether public sector banks or private/foreign banks between LE 13.01 to 15.99 to the dollar.
And it was a chain reaction.


Here is a copy from the Central Bank of Egypt's statement in Egypt thanks to dear Heba Mahfouz.
 It started rapidly with an increase in customs and tariffs then air flights tickets by 46%.

At 9.30 PM , media began to speak about how the prices of fuel would increase at midnight. This created a frenzy and thousands of people took their cars and headed to gas stations creating traffic jams till early Friday hours !!

Before the midnight , the prices of fuel increased officially in Egypt.

The 80-octane gasoline fuel "used by lower and lower middle classes" price increased by 46.8% while the 92-octane gasoline fuel price increased by 34.6% and diesel price increased by 30.5%.
Of course, the increase of diesel prices means the increase in the prices of food especially vegetables and fruits as they are transferred by trucks that use diesel.
Fuel price decision
A copy from the decision

According to what I understand this increase has to do with the price of the US dollar and not with the subsidies which El-Sisi should lift according to the IMF recommendations.

It was just the beginning as Egyptians had nothing to speak about except the floating and devaluation of the Egyptian pound.

Yes , floating  the Egyptian pound is an important step theoretically to for economic reforms in Egypt but I think realistically as well theoretically, you can not have successful free floating of your currency without a true and correct economic and political reforms.

You can not speak about the devaluation of your currency and lifting subsidies when you spend billions of dollars on unneeded mega-national projects and endless arms deals.

You can not speak about the devaluation of your currency and lifting subsidies for real without having a real plan to help your middle and lower classes, without having tourism to have foreign currency as well industry back to have exports back and without having true austerity measures that would start with the statesmen and government before anyone else.

With my due respect to the great economist Mohamed El-Arian and IMF experts , the economic reforms proposed currently will crush the middle class in Egypt before the lower classes which already were living on the margin.

I do not have the same knowledge like those great economists but this is what I think.
P.S according to IMF Middle East Chief Masood Mohamed in an interview on CNN earlier this week , Egyptian officials were the ones who proposed the floating of the Egyptian pound.

It is worth to mention all the Pro-Regime media and social media accounts were claiming on Wednesday that the price of the dollar dropped about 7 pounds suddenly and allegedly in the Black market.

They were promising that the US dollar price would drop later but as usual next day , it was the biggest shock for them.
They are still living in denial.😑😑😐

On twitters , the hashtags of "Black Thursday" , "Central Bank" , "Tarek Amer" , "Middle class", "Fuel" and "Floating the pound" in Arabic were trending all day long in Egypt.

The Hashtag "#Alaa_Morsi" was trending as well. Alaa Morsi is a famous comedian whose angry leaked phone to some bank over a car loan went viral over his angry and rude insults to the CBE and his governor then "Was not Tarek Amer". 
That audio call was brought back to express the angry feelings towards Amer"

Personally, I am extremely worried , so worried.
This post will be updated on Friday as I can not keep my eyes open. We speak about nothing in Egypt except that. 
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5 comments :

  1. If Augusto Pinochet, of Chile, would have written a bestseller book it would be “Dictatorship for the Dummies”. His actions and policies during his 17 years rein devastated masses of his people, to the advantage of the junta and his supporters.

    Occasionally it needs to get worse before it turns better. The dilemma now is how worse it can go!!

    ReplyDelete
  2. If 'it' hit the fan as Z said, then the Egyptian people will eat 'it'.

    ReplyDelete
  3. It is starting to hit fans all over the world.

    ReplyDelete
  4. I heard that the LE is now closer to 20 to the dollar?

    ReplyDelete

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