CAO Points Out Reasons Behind Inefficient Investment Of Foreign Loans
The Central Auditing Organization (CAO) has issued a report manifesting the reasons behind not using some of the foreign loans in an optimal way. This is because, the report says, the establishment costs of these projects rose above the estimated economic costs, in addition to the long executive time which made these projects fall under the international standards.
These reasons also include the slow performance of public bodies who delayed in executing the financed projects as some of which are still under construction for about 10 years. Besides, some companies default on loans and became unable to provide the local components required for these projects.
Dr. Abdel Motteleb Abdel Hamid, professor at the Sadat Academy for Management Sciences, stressed on the importance of avoiding all the negative points monitored by the CAO so as to benefit from the foreign loans in the upcoming period. The International Monetary Fund’s (IMF) loan amounting to US$ 4.8 billion which Egypt seeks to receive will be used in financing the balance of payments deficit that registered about EGP 12 billion. Receiving such loan will improve Egypt’s credit worthiness and regain the confidence of businessmen and investors in the Egyptian market.
Receiving such loan reflects IMF’s confidence in the ability of the Egyptian economy in repayment, Abdel Hamid noted. The government shall stop local borrowing as the ratio of local debt to GDP rose to 75%, while European Union countries conditions that this rate shall not exceed 60%, Abdel Hamid affirmed. Although the volume of the external debt has negative impacts, but it still do not pose dangers.
Dr. Manal Abdel Baky, teaching assistant at Economics Department at the American University in Cairo (AUC), said the conditions of the IMF loan are not clearly announced. Dr Ahmed Mandour, former Dean of Faculty of Commerce, Damanhour University, said the government shall set its priorities so as to use the IMF in an optimal way.
