Egypt: Proposal to Amend Strategy for Dealing with Debt

Egypt’s central bank in Cairo (Reuters)
Egypt’s central bank in Cairo (Reuters)
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Egypt: Proposal to Amend Strategy for Dealing with Debt

Egypt’s central bank in Cairo (Reuters)
Egypt’s central bank in Cairo (Reuters)

A member of the Egyptian parliament’s economic committee revealed a proposal to reduce monetary pressure, by addressing the debt problem, in light of the country’s severe currency crisis.

In exclusive remarks to Asharq Al-Awsat, MP Ahmed Samir said that the proposed strategy included a plan to convert Egyptian debts into investments and projects, through an agreement with the International Monetary Fund and the World Bank.

He explained: “If an agreement is reached with these two institutions to reduce Egyptian debt and transfer part of it to projects and investments, as happens with some other countries, this will reflect positively on the Egyptian credit rating.”

According to the Ministry of Finance’s financial report in September, Egypt spent 391.8 billion pounds on debt service in the first two months of the current fiscal year 2023/2024, with a 160-percent increase over the 149.9 billion pounds spent in the same period of the previous fiscal year.

This widened the budget deficit to 3.2 percent of GDP during the first two months, from 1.4 percent the previous year.

Samir said that Parliament’s economic committee was currently studying amending the capital law, to stimulate transactions on the Egyptian Stock Exchange by attracting new companies and increasing local and foreign offerings.

Despite the rise in Egyptian stock market indices over the past weeks, and the main index recording a new high of 24,300 points, supported by foreign purchases in Thursday’s session, the market capitalization of shares of listed companies amounts to 1.6 trillion pounds.

Moody’s, Fitch, and Standard & Poor's, have lowered Egypt’s credit rating, in light of a record rise in sovereign debt and debt service. In its latest report, Moody’s downgraded Egypt’s rating from B3 to Caa1.

In this context, the Egyptian deputy said: “We are currently comparing the Egyptian Stock Exchange to the Saudi Tadawul... Therefore, we see that the trading volume on the Egyptian Stock Exchange should double... We need more liquidity by offering more companies, and that is by increasing the incentives that we are currently studying.”

Egypt had launched the first version of the Sustainable Development Strategy: Egypt Vision 2030, in 2016, as the basis for the comprehensive development process.

In early 2018, the country decided to update its sustainable development agenda with the participation of all stakeholders from development partners, in order to keep pace with the changes that occurred in the local, regional and global context.

The second version of Egypt’s Vision 2030 focused on explaining how the Egyptian contribution will serve the international agenda and the global context.



OPEC Again Cuts 2024, 2025 Oil Demand Growth Forecasts

The OPEC logo. Reuters
The OPEC logo. Reuters
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OPEC Again Cuts 2024, 2025 Oil Demand Growth Forecasts

The OPEC logo. Reuters
The OPEC logo. Reuters

OPEC cut its forecast for global oil demand growth this year and next on Tuesday, highlighting weakness in China, India and other regions, marking the producer group's fourth consecutive downward revision in the 2024 outlook.

The weaker outlook highlights the challenge facing OPEC+, which comprises the Organization of the Petroleum Exporting Countries and allies such as Russia, which earlier this month postponed a plan to start raising output in December against a backdrop of falling prices.

In a monthly report on Tuesday, OPEC said world oil demand would rise by 1.82 million barrels per day in 2024, down from growth of 1.93 million bpd forecast last month. Until August, OPEC had kept the outlook unchanged since its first forecast in July 2023.

In the report, OPEC also cut its 2025 global demand growth estimate to 1.54 million bpd from 1.64 million bpd, Reuters.

China accounted for the bulk of the 2024 downgrade. OPEC trimmed its Chinese growth forecast to 450,000 bpd from 580,000 bpd and said diesel use in September fell year-on-year for a seventh consecutive month.

"Diesel has been under pressure from a slowdown in construction amid weak manufacturing activity, combined with the ongoing deployment of LNG-fuelled trucks," OPEC said with reference to China.

Oil pared gains after the report was issued, with Brent crude trading below $73 a barrel.

Forecasts on the strength of demand growth in 2024 vary widely, partly due to differences over demand from China and the pace of the world's switch to cleaner fuels.

OPEC is still at the top of industry estimates and has a long way to go to match the International Energy Agency's far lower view.

The IEA, which represents industrialised countries, sees demand growth of 860,000 bpd in 2024. The agency is scheduled to update its figures on Thursday.

- OUTPUT RISES

OPEC+ has implemented a series of output cuts since late 2022 to support prices, most of which are in place until the end of 2025.

The group was to start unwinding the most recent layer of cuts of 2.2 million bpd from December but said on Nov. 3 it will delay the plan for a month, as weak demand and rising supply outside the group maintain downward pressure on the market.

OPEC's output is also rising, the report showed, with Libyan production rebounding after being cut by unrest. OPEC+ pumped 40.34 million bpd in October, up 215,000 bpd from September. Iraq cut output to 4.07 million bpd, closer to its 4 million bpd quota.

As well as Iraq, OPEC has named Russia and Kazakhstan as among the OPEC+ countries which pumped above quotas.

Russia's output edged up in October by 9,000 bpd to about 9.01 million bpd, OPEC said, slightly above its quota.