The reserve has reached a historic degree.. Why is the Central Financial institution not offering $300 million to stop energy outages?

03:33 p.m

Saturday, June 8, 2024

Manal Al-Masry wrote:

Though Egypt’s overseas change reserves rose to the very best degree in its historical past on the finish of Might final yr, the facility outage disaster continues as a result of want for $300 million per 30 days to import the gasoline wanted to generate energy vegetation, which raises a query. amongst some: why is not a greenback being allotted to stop… Electrical energy?.

Specialists and bankers advised Masrawy that the Central Financial institution has priorities when utilizing overseas change assets, the primary of which doesn’t embrace gasoline, which is the duty of the Ministry of Petroleum and the Electrician, in addition to his dedication to creating the reserve to new, increased ranges.

Final week, the Central Financial institution introduced a rise in overseas change reserves by about $ 5 billion, reaching the very best degree in its historical past, recording about $ 46.1 billion on the finish final Might.

Final yr, Egypt started a plan to scale back electrical energy hundreds and set blackouts twice a day at particular instances in every area as a result of worsening overseas change disaster and the rise in home consumption. of gasoline wanted to function energy vegetation.

Dr. Mohamed Maait, Minister of Finance, stated in earlier statements that the electrical energy sector wants a further 300 million {dollars} per 30 days to stop the discount of electrical energy hundreds for 2 hours a day, as the costs of petroleum merchandise are nonetheless excessive on the worldwide degree. degree, towards the background of the rise in world oil costs and the change within the change price Which can have an effect on the overall funds of the state.

Develop the reserve first

Dr. Fakhri Al-Feki, an financial skilled and head of the Home of Representatives Planning and Funds Committee, advised Masrawy that the bounce in overseas change reserves got here from the entry of Ras El-Hikma {dollars} and overseas change flows from different establishments after that. . change price liberalization.

He defined that the Central Financial institution is dedicated to persevering with to replenish the financial reserve, and that it has not but reached the extent agreed by the Worldwide Financial Fund with the goal of defending the economic system from dangers any which will exist, which would require continued work to fill. in a powerful method that reveals the extent of tasks outdoors of Egypt.

The Worldwide Financial Fund – which is supporting the financial reform program with an $8 billion mortgage – expects that to proceed rising to $61.7 billion within the 2028-2029 fiscal yr – and the fiscal yr in Egypt begins on the primary of July.

Within the final 3 months, Egypt obtained $ 24 billion from the most important funding cope with the UAE, in addition to the settlement of Emirati investments in Egypt price $ 11 billion, which is the primary issue behind -sources of overseas change reaching the next degree.

This comes along with different flows from the International Commerce Fund and oblique overseas investments of about $20 billion, bringing the whole flows to Egypt to about $45 billion previously 4 months, based on Commonplace Chartered Financial institution estimates.

Mohamed Abdel-Al, a banking skilled, stated that the administration of the foreign money reserve has sure limits as a result of it consists of obligations from deposits from Arab nations price $19 billion, which inspires the central financial institution to be extra cautious after they use it.

The Central Financial institution stated in an earlier assertion that overseas change reserves, which reached a historic degree on the finish of Might final yr, are sufficient to cowl about 8 months of commodity imports to fulfill the nation’s wants. safe, considerably increased than internationally acknowledged secure ranges. , which signifies the superior stage of this case.

Abdel-Al believes that the dimensions of Egypt’s obligations requires a money reserve that covers greater than 8 months.

Who’s chargeable for paying the gasoline import invoice?

In keeping with Fakhri Al-Feki, the financing of gasoline imports is important, however it’s the duty of the Ministry of Electrical energy and Petroleum and never the Central Financial institution, which is burdened with stricter obligations.

Abdel-Al agreed with the earlier opinion, that in the meanwhile the Central Financial institution offers precedence specifically to strategic items corresponding to meals merchandise that can not be given away, not like securities electrical energy that may be accepted for some time.

5 priorities in utilizing the reserve

The Central Financial institution has priorities in using overseas change reserves with a view to rising the quantity of present obligations, together with the cost of the state debt service represented by (curiosity allowances and mortgage) on their due dates, which is a precedence to keep away from the credit score of the state. ranking to be open to say no, based on what the Chairman of the Plan Committee stated The funds is within the Home of Representatives for “Masrawy”.

He additionally stated that among the many priorities is the cost of Egyptian taxes to overseas corporations to make sure continued cooperation with the overseas accomplice in gasoline exploration and extraction, as effectively has been financing wheat imports, and the Central Financial institution’s reimbursement of its overseas loans is a precedence.

In keeping with the Central Financial institution’s report on the exterior scenario of the Egyptian economic system, estimates of Egypt’s exterior debt funds – curiosity and debt funds – elevated by about $2.44 billion between as we speak and the subsequent yr to about $ 56.74 billion, based on the report on the exterior scenario of the Egyptian economic system revealed on its web site.

A brand new contract

Fakhri Al-Feki anticipated the facility disaster to finish with Egypt implementing a brand new funding deal to develop town of Ras Gamila for a strategic investor.

He defined that he would introduce overseas change assets into a brand new contract and permit us to beat the present challenges.

Mohamed Abdel-Al stated that after the Central Financial institution has completed paying all its obligations, together with loans, dividends, and so on., and new overseas cash flows in, the Central Financial institution will begin giving gasoline inlet to stop electrical shock.