A number of Egyptian investors took out a full-page advertisement in Egypt’s Al-Ahram daily newspaper on Tuesday calling for President Abdel-Fattah El-Sisi to take “emergency measures” to save Egyptian companies and industries after the recent floating of the local currency.
The ad, signed by nine investors associations, explained that Egyptian companies are facing bankruptcy as they are required to pay back bank loans at the new exchange rate, even though they have already sold their products using the old exchange rate.
In November, Egypt’s central bank freely floated the pound, slashing its value by more than half.
The ad also said that most companies continue to struggle to obtain dollars.
The investors warned that if Egyptian companies go bankrupt, there will be a drop in imports and a shortage in basic goods as well as an increase in unemployment. The investors also said that they expect that many company owners will face legal action due to their inability to repay bank loans.
The associations that published the ad represent several prominent industrial zones in the country, including the 10th of Ramadan, 6 October, El-Obour and Sadat City.
The decision to freely float the Egyptian pound comes as part of an economic reform plan that Egypt embarked on in 2014 aimed at alleviating a dollar shortage and stabilising the country’s flagging economy.
The reform plan also included fuel subsidy cuts that increased prices up to 78 percent, as well as imposing new taxes to ease a growing budget deficit.
The head of the Central Bank of Egypt defended the reforms in an interview on Sunday, saying that banks have been able to raise around $6.5 billion since the decision to float the pound, which is 15 times more than what was being collected before the flotation.
He also said that despite some negative outcomes, the ongoing consumer inflation means a boost for locally produced goods over expensive imports.
Source: Ahram Online