Hunger Revolution Looms As Foreign Reserves Drop Sharply: Experts

Egypt’s foreign cash reserves dropped US$ 448 million to reach US$ 15.035 billion at the end of last November. A number of bankers warned that a hunger revolution is looming in Egypt, if the presidency fail to overcome such crisis. They warned that the current foreign reserves are not enough to import commodities for more than three months.

The banking expert Bassant Fahmy affirmed that the current unrests push Egypt into a “real catastrophe”. She condemned the clashes happening in Mohamed Mahmoud Street and outside the Presidential Palace between the supporters and opponents of The Egyptian President Mohamed Morsi.

The foreign reserves are not used only in importing commodities such as petroleum products and wheat, but they are also used to repay foreign loans and import raw materials for factories. Therefore, the factories may be forced to cut jobs, if they do not enough raw materials.

She explained that the current unrests raise fears of the rich more than the poor as the former may be compelled to sell their investments in Egypt. She called on Morsi to withdraw his latest decisions to spare the country a hunger revolution.

Fahmy expected such retreats in foreign reserves to continue to post negatives impacts on the Egyptian Exchange, Suez Canal revenues and local and foreign investments.

Mahmoud Negm, deputy manager of investment department at Export Development Bank of Egypt, attributed such retreat in foreign reserves to the current political turmoil as supporters and opponents of Morsi clash because of the last Constitutional Declaration.

Negm expected that Egyptian pound will slip against foreign currencies in the upcoming period because of the current events. There will be no way for economic recovery without political consensus, he affirmed.

Negm earlier expected the Egyptian economy to flourish after Morsi has become a president and Hesham Kandil was named prime minister. However, the current political events curb the economic growth, he explained.

He expected that Egypt will overcome such crisis as political parties will definitely meet to solve the problem.