CAIRO: “For the first time since the Second World War, the weighted average growth rate of GDP for developed countries is negative, said Finance Minister Youssef Boutros-Ghali at a conference Wednesday.
Mentioning a lag effect with regard to the impact of the global economic crisis, he noted that the developing world, too, was vulnerable. “It will begin to be felt very soon in our [developing] countries, he argued, adding that problems in the financial sector traditionally take some time to be felt in the real economy.
Ghali was speaking at the Egypt-US Trade Finance Conference in Cairo on Wednesday, where educating potential investors was the main focus.
Trade “is a two way street, American Chamber of Commerce President Omar Mohanna said at the opening of the conference, “Egypt has much to benefit but we also have much to offer.
With rapidly shifting currency values, uncertainty in the financial system, and a dearth of confidence in the capital markets, governments around the world have been sent scrambling to stimulate trade and investment over the past several months.
From stimulus packages to lower interest rates, efforts to stabilize the economy and spur growth are at a fevered pitch – but educating potential Egyptian investors on the different US agencies that might facilitate bilateral trade was the highlight of the conference.
Three US agencies were in the spotlight – the Export-Import Bank (Ex-Im), the Overseas Private Investment Corporation (OPIC) and the Trade and Development Agency (USTDA).
US Ambassador Margaret Scobey, in her opening address, discussed the already deep trade ties between the two countries, noting Egypt and the US conducted $7.9 billion in business in 2007.
Scobey also stressed the important role that the three US banks could play in promoting bilateral trade.
“One of the major concerns of companies like yours looking to expand their business is access to flexible and appropriate financing tools to address their unique needs, she said.
“The US government trade finance agencies represented here today at this conference fill the market gap where the private market lacks the capacity or the willingness to provide financing, she added.
Scobey also reviewed each of the three US agencies that were the focus of the conference, touting the importance of each and urging Egyptian investors to get involved.
Following the ambassador’s address, Finance Minister Boutros-Ghali gave the conference’s keynote speech.
He strayed from the theme of trade to delve into the current global economic slowdown, discussing its causes and enumerating a few possible solutions. He also took to task those responsible for the US financial systems collapse.
“Predatory lending coupled with a touch of greed, he noted, were partially to blame, in addition to “benevolent neglect on the part of market regulators.
The biggest tactical error made by regulators, he argued, was allowing venerable investment bank Lehman Brothers to collapse.
“Lehman Brothers turned out to be a systematically relevant institution, he said, arguing that allowing it to fall destabilized the whole financial system.
The solutions, Boutros-Ghali said, for the world to emerge from the crisis intact are multi-pronged. He stressed that global cooperation in implementing these solutions would be critical to their successes.
Among the ideas he put forward were recapitalizing the market, absorbing losses, upgrading the regulatory infrastructure and injecting fiscal stimulus into the system.
Despite a somewhat bleak tone to his speech, the minister ended on a positive note.
“The same ingenuity that got us into this mess, he argued, “will get us out of it.
The attention of the conference quickly turned to the three US agencies in attendance. A representative from each discussed their agency’s operations.
Carl Kress of the USTDA argued that the role of his agency was to “promote economic development and connect that development with US trade.
The USTDA offers funding for, among other things, project feasibility studies that bring in experts to assess a project proposal on site. The USTDA then facilitates trade between the US and foreign countries during execution of the proposed project.
Rod Morris of OPIC discussed his agency’s three divisions: long-term financing, political risk insurance and investment funds. As a member of the political risk insurance division, Morris discussed how through offering insurance against political calamity, OPIC was working to “help build investments in overseas markets.
The agency, he noted, has $177 billion in US investment supported to date.
He also argued that OPIC’s rates were more competitive than other private firms. “We don’t have a profit motive, he said. “Our objective is actually developmental. Africa Director for the Ex-Im Bank John Richter discussed the role of his bank. The Ex-Im Bank, he noted, works primarily with US entities trading abroad, aiming to make US exports competitive against rival companies sponsored by other states.
The 74-year-old bank provides loans of all terms to US companies. Richter noted that Egypt has the second highest Ex-Im exposure in North Africa after Morocco.
He encouraged Egyptian business people doing business with US exporters to get in touch with the bank and begin building a three-way partnership.
