Hassan Hussein, chairman of the Banking and Stock Exchange Committee of the Businessmen’s Association and a financial expert, stressed that the pressure of foreign exchange demand is influenced by various external and internal factors against the background of the economic consequences.
The head of the Banking and Stock Exchange Committee at the Businessmen’s Association added in press releases today that he has a number of proposals aimed at reducing foreign exchange demand pressure due to these repercussions.
He explained that the increase in demand for the dollar in the domestic market was firstly linked more to local considerations than international considerations, because it was linked to the increase in imports, which represents a great pressure in the demand for the dollar by importers. . attributed the second reason to the state’s dollar obligations with others in addition to its debt services.
Hussein stressed that switching to the barter system and direct agreements with exporting countries are a necessity to reduce the demand for foreign exchange.
He added that the solution initially lies in trying to reduce the demand for the dollar in the domestic market through barter agreements with different countries, and payment agreements in the local currency of this country, and therefore those imports are derived from the use of the dollar because the primary objective is to reduce the demand for the dollar due to increased consumption and imports.
Hussein proposed the tendency to reduce pressure on the dollar by transferring part of the imports to the exchange system, and the other part through direct agreements between Egypt and the countries from which they import, which also includes imports from the private sector may include, until the difference is paid in the currency of these countries by the end of the year, and then out of focus of pressure related to the dollar.
Hussein cited this as an example of the volume of imports from China, most of which belong to the private sector.
He pointed out the importance of entering into all this data in an agreement with China and paying another year in Chinese yuan, which removes pressure on the dollar for this country, and implement the same with several countries from where we at large tariff imports, such as e.g. India by paying in Indian rupees, Russia by paying in rubles and Brazil in Brazilian currency.
He pointed out the importance of emphasizing that these agreements cover all Egyptian private and government transactions, and the importance of these countries is, for example, that their currencies are not directly linked to the dollar, and therefore we have a large and final contribution made. to reduce domestic demand for the dollar.The reduction is measured by the total imports of countries that agree to trade in this way And these are certainly large amounts, and for the record, these countries are currently demanding to share their national currencies as part dealing with the results of the Ukrainian-Russian war.
Regarding the import bill, Hassan Hussein stressed that the part related to the import of production requirements can not be touched as it is linked to local industrialization and the national goal set by the President of the Republic to export up to $ 100 billion, while the real problem lies in food commodities, especially wheat, considering that the high density demographics and lack of birth control are a major component of the problems of the local economy.
He pointed out that the second reason for the increase in demand for the dollar is the state’s dollar obligations to pay the debt linked to the bonds issued by the government. “Hussain” explained that the current conditions place the importance of the reconsideration of foreign loans. policy, especially as Egypt is also one of the largest lending countries at international level.Several international bodies believe that the volume of lending, especially external lending, exceeds the required level.
At the same time, he explained the understanding of the state’s tendency to borrow to expand investments and establish new projects, at a time when the private sector was not active or efficient, as well as with the lack of foreigners’ appetite for investment , explained.
Hussein pointed out that borrowing through international bonds exposes us to market fluctuations, and the exit of foreigners from emerging markets threatens dependence on them now, and that borrowing through foreign bonds makes us subject to the fluctuations of international markets, as well as to policy. from abroad, and accordingly making direct loan agreements, as well as syndicated loans. Loan agreements from some governments directly, which means getting out of the consequences arising from these fluctuations and the fall of the secondary market for bonds to buyers. It also keeps us from being affected by various international crises such as the ongoing war between Ukraine and Russia and the consequent price fluctuations.
Hassan Hussein concluded that expanding internal lending is an alternative to external lending, and to direct funds to finance specific projects and not to bridge the budget deficit.
He stressed the difficulty of relying on international bonds at this stage, given the tendency of most foreign investment to leave emerging markets as they carry high risks, regardless of Egypt’s specific situation, which at the same time points to the importance to rely on internal. borrow as an alternative to external loans.