Is the Worst Behind the Troubled Egypt?

by Gily Tenorio on March 12, 2013

in Banking, Current Events

The following article is about the current events happening in Egypt. Specifically, it tells us what to expect in the future considering the current economic situation of the country with the new Egypt’s central bank governor.

If you’re an OFW working in Egypt, this news may affect you in some way as banking and financial system change in the country. An expat will definitely see better developments in days to come.

 

You pay your money and you take your choice when it comes to Egypt, banks and the state of the economy. No, we’re not talking about opening a current account or applying for a credit card or something else equally prosaic. We’re talking about the state of the Egyptian banking sector in the context of the current political and economic uncertainty which has dogged the country since the January 2011 revolution.

Hardly a week seems to go by without a news story with ‘crisis’ somewhere in the headline. All of it predictable. All of it grist to the speculative mill. Another non-news story adding to the international feeding frenzy. Yes, Egypt has deep-rooted structural problems which are obviously having an adverse impact on the economy.

But we know all of this because it’s not difficult to see. There’s been dictatorship for decades after all, toppled by a popular revolution. So Egypt’s ills were never going to be cured overnight, the next month, next year or even perhaps the next decade to come, no matter how much everyone wants them to be. It was always going to take time to get life back on track considering politics and the economy fit for a new age.

Certainly, the appointment in January of Hisham Ramez as Egypt’s new central bank governor has been seen as a good move by the international community. The former central bank deputy governor is widely respected in banking and business circles and regarded as the best choice for the position.

Following his appointment by Egypt president Mohamed Morsi, Mr. Ramez was quick to proclaim in a Financial Times interview that the worst was behind the country and that confidence in the economy would grow, helped by a combination of fiscal reforms and the expected $4.8 billion International Monetary Fund (IMF) loan agreement.

Dismissing fears of a currency collapse, recent panic in the currency markets at the end of last year was caused by rumors over the state of the banking sector, he told the Financial Times. But the banks were healthy and liquid after having successfully weathered the global financial crisis.

Mr. Ramez said in the interview, “We have economic problems but the population is getting more understanding about the problems and the economy is still functioning, the people are working, Egypt is a safe place.”

Whether many hard-up Egyptians would agree with the assessment or not, it is a moot point given the daily struggle to find jobs and to make ends meet. What most of them certainly care about is earning enough money to live. Nothing more. The highfalutin world of finance and IMF loans is a very distant topic indeed.

But if the disconnection in Egypt’s sprawling cities and conurbations is fueling a growing division, then it is magnified many times over in the countryside. The rural poor, as they are often called, have always had it tough, eking out a living on the land with no ATM or cash machine in sight. But that’s the other often invisible side to Egypt’s story, one which may prove more enduring and intractable than the legacy left behind by the revolution.

Click here to read more about the interview of Mr. Hisham Ramez in the Financial Times. What are your thoughts about this news? Feel free to comment on the section below. Thanks!

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