Nasr Abdeen: Islamic President Would Harm Egyptian Economy

Mohamed Nasr Abdeen, CEO of Union National Bank Egypt, said “Winning of any Islamist candidate in the presidential elections will affect on Egypt’s economic agenda during the coming period, due lack of a unified trend about the Egyptian economy between the Islamic movements”. “The Muslim Brotherhood and Salafist popularities decreased by 20% after the parliamentary elections because of their desire to dominate all the state’s apparatus” he added.

In his interview with “Amwal Al Ghad”, Abdeen said Egypt’s political instability affected all economic sectors, consequently foreign currency’s resources reflecting in a weak cash reserve volume, adding that Arab countries aids represented a big proportion of Egypt’s reserve of hard currency.

How do you evaluate Egypt’s economy amid current political instability?

The political instability in Egypt directly reflected on all the Egyptian economic sectors and influenced its resources. This is a natural matter especially when a revolution doesn’t have a leader, program or a unified aim, as a result different demands, point of views and aims emerge to extend the transitional period.

The classing demands negatively reflect on Egypt’s economic state; where as some sectors think that corruption which prevailed during the former regime should end in a short period without considering the country’s economic and political state.

Although, all expectations refer to returning the security and political stability to Egypt, as finishing the transitional period will gradually revamp the Egyptian economy, especially the infrastructure hadn’t affected by the post-revolution incidents. The joint interests between the world’s countries during the coming period will make Egypt occupies a good position during the coming periods.

 What the effect on foreign reserves?

The increase of foreign reserve in 2010 wasn’t due to the production increase, but it was because of a number of some Arab countries’ aids to Egypt. However, the post-revolution lax of security influenced all the state’s dollar resources; such as tourism sector, which is one of the prominent main resources that generate foreign currency to the country, more than $12 billion annually. All the expectations, on the mid-term, refer to the return of the sector’s growth rates, especially with the return of stability.

The production increase return is one of the important alternatives to be focused on during the coming period, as this result in increasing the export rates that generate hard currency revenue and positively reflect on the deficit of payments balance.

 How factional demands affect economy?

 The factional demands deteriorate the economic states especially the economy suffers lack of all resources.

These demands should be delayed in order not to be a burden on the state and a minimum limit of salaries should be set according to a schedule without comprising the citizen rights in protesting; whereas the revolution incidents, happened at the beginning, led to the continuity of demonstrations and factional demands as well suspending the production process and slashing in growth rates.

One of the important factors to support the process of returning and increasing the production is to eliminate the lax of security in order to adjust the Egyptian streets’ states and stability, moreover, to protect the infrastructure and the state’s public buildings.

 Let’s assume that the president is Islamist, How this will be reflected on the economic agenda?

The existing Islamic political movements have different economic trends, consequently each economic program will influence the country in case of their candidate wins.

The MB and Salafis’ popularity decreased by 20% since the parliamentary elections because they backtracked on a number of their decisions; in addition, they aim to acquire the legislative, executive apparatus as well the presidency. This means that the coming period will be the most failing in the MB’s history in case of winning the presidential elections, especially during the challenges that the country faces.

How do you see the decision of offering Dollar certificates in Gulf countries?

It’s a perfect idea and an alternative solution to save dollar cash that bolster Egypt’s cash reserve which declines especially during this time as Egypt hasn’t get yet the IMF loan, $3.2 billion, in addition to slashing all Egypt’s dollar resources.

I expect that these certificates will be welcomed by Egyptians in Gulf Countries, because of their desire to support their country.

Presenting these certificates for 3 years with good return reach 4%, and their buyers has the right to spending them at any time.

How Credit Rating Declining affected economy?

The repeated credit rating decline of international rating agencies has negative and noticeable influence on the volume of investment whether foreign or local; moreover, the Egyptian banks relation with the foreign banks.

And also decreasing the rating highly affects on the volume of Egypt’s cash reserve and impedes its borrowing, in addition to its inability to present bonus in the global market. In case of succeeding, this will be with high interest rates; due to increasing the risks of Egypt’s internal and external debts, either long or short-terms. This matter led to increasing the return on the governmental debt instruments during the current period to reach 16% for the government’s ratification on local banks in meeting the budget deficit.

What are your estimated budget’s features during 2012?

We developed an ambitious estimated budget aims to achieve net profit reach EGP 22.2 million comparing to net profit reached EGP 17.5 million in 2011 with increase .27%. In addition to achieving good growth rates in the loans’ portfolio with 36% to reach EGP 2.73 billion in return for EGP 2.01 billion at the end of 2011. Also it aims to increase the deposits’ portfolio with 33% to reach EGP 4.3 billion, in return for EGP 3.3 billion at the end of 2011and increasing the total assets to EGP 5.7 billion in return for EGP 4.5 billion with increase rate 26%.

What about branches’ expansion plan in Egypt?

We aim to inaugurate 5 new branches during the year to reach 35 branches. We are working on selecting a number of special places for these branches. The bank’s strategy since it acquired Alexandria Commercial & Maritime Bank in 2006 is to be in Al Egypt’s governorates through a branch at least. We were able to open 22 branches to reach 30 during the current year. The number of the bank’s employers from 300 in 2007 to 526 employers in 2011.

 What is the volume of the non-performing loans?

We received a non-performing loans portfolio after acquiring Alexandria Commercial & Maritime Bank beside the gap of allocations, but we were able during the previous period to settle all the clients’ debts and fill the gap of the allocations with 106%.

Do you eye establishing constructing arm for the bank during the coming period?

We already study constructing a company in the field of real estate and agricultural investment with capital EGP 100 million. But we still at the primary phases of its study and we haven’t decided its inauguration appointment so far. We expect it will achieve good profits for the bank.