Egyptian pipe dreams? Final, final draft of economic plan. Another fanciful pipe dream or is this a realistic ambition?
By Farah Halime, Rebel Economy
Egypt, the world’s biggest wheat importer, will be able to cease importing wheat for the production of state-subsidised bread if it builds enough silos to store locally-produced grain, Agriculture Minister Salah Abdel Momen told Reuters on Sunday.
To put this idea into context, of the 18.8 million tonnes of wheat consumed in Egypt each year, around half is grown locally, Reuters reports.
Subsidised bread alone accounts for 9.6 million tonnes of wheat consumption. Last season, Egypt’s harvest was 9.5 million tonnes, the agriculture minister said.
The problem here isn’t the amount produced but wastage through inefficient storage and wheat sold on to private bakeries.
By storing more of its locally-grown wheat for subsidised bread production, Egypt might be able to cut down on how much it spends importing wheat for subsidised bread production. But that’s a big “if” considering the following, which by no means is an exhaustive list:
– investment in proper silos has been mooted for several years and nothing has changed
– private bakeries may contest this decision as it will directly impact the amount of wheat they receive
– there are some shady figures involved in the wheat business. For one, the chairman of Egyptian grain trader Venus was accused of using dubious ties with the former regime to profiteer in the grains market. He was subsequently acquitted of any wrongdoing, but people close to him have since been arrested and detained.
Those people include Gamal Eddin Abdel Aziz, the secretary of former president Hosni Mubarak who is accused of pushing his wife Magda Abdel Fattah into partnership with Venus, which Egypt Independent describes as having “won most of the tenders made by the General Authority for Supplying Commodities by a direct order from the secretary of the former president.”
It is not as straightforward as it first appears.
Ω
The government is preparing the final, final, final draft of its economic programme needed to secure the proposed $4.8 billion from the International Monetary Fund (IMF).
Finance Minister Momtaz Al-Saeed even denied reports that the draft had been completed and presented to the cabinet. It seems an odd denial at a time when investors and the business community are expecting more than a draft of an economic programme that should have been written months earlier.
The economic programme, which is a re-draft of an earlier programme presented to the IMF, will be completed by the end of this month, in time for the IMF delegation visit, the finance minister said.
Most of the details of the economic plan have already been revealed, including raising the price of 95 octane fuel, which is used for more expensive cars, and value-added taxes placed on various products, including cigarette packets.
State-run Ahram Online summed up the main point of this new economic plan as follows, “the programme, based on the scant details available about it, does not seem to differ significantly from an earlier programme prepared by the government for a previous round of negotiations with the IMF in March.”
Ω
Meanwhile, as Egypt struggles to get its act together on the economy, the country appears keen on getting Gulf money as soon as possible.
Sources told Ahram Online that Khairat El-Shater, the first choice for the Muslim Brotherhood’s presidency, visited the Qatari capital Doha last week to meet “top officials” and arrange for the full payment of Qatar’s loan to be made into the Central Bank of Egypt before the end of the year.
Qatar said it would pump $2 billion into Egypt’s central bank, with the first instalment of $500 million already deposited and the second due to arrive this month.
The dates for the third and fourth installments have not been announced, but “sources speaking to Ahram Online say they may be moved forward from the first quarter of next year to November and December.”
El-Shater appears to be arranging this transaction, according to the Ahram article. If true, the rumours that he’d been appointed Morsy’s economic adviser would make a lot of sense.
Ω
“There’s no problem between Iran and Egypt,” Iran’s Fars news agency reported president Mohamed Morsy as saying during his visit to Iran.
Apparently Iran and Egypt are putting everything behind them and starting a new era of trade ties, after an Egyptian business delegation visited Iran last week.
There are already reports of the type of investment that could take place. Iran’s deputy oil minister said the Iranian government is willing to invest millions of dollars in oil and gas exploration in Egypt, state-run Al Ahram reported.
Iran used much of its reserves at home, and may be using more considering a second phase of subsidy reforms has been delayed.
Still, for a country that holds the world’s fourth-largest proven oil reserves and the world’s second-largest gas reserves, it’s a little odd that Iran is looking to Egypt for oil and gas opportunities. This may be all propaganda.
Farah is a business journalist and founder of Rebel Economy, a blog focused on how regional economies are rebuilding after the Arab Spring.
