Head of the Importers Section of Cairo Chamber of Commerce, Ahmed Sheha, believes there is no crisis in the availability of the dollar in Egypt. “People are manipulating the dollar, causing its abundance in the market,” he added. Sheha said that the imports indicative list to be launched by the state will increase monopoly and raise prices, and he does not believe the dollar rate will decrease anytime soon.
Sheha criticised the Central Bank of Egypt’s (CBE) decision to cap dollar deposits at banks to $10,000 a day and $50,000 a month, saying that the decision is behind the growing price of the dollar in the parallel market, as it limited its flow from abroad, especially transfers from expats.
Investors are accused of being the reason behind Egypt’s worsening dollar scarcity crisis, where Egypt has turned to a large imports. How do you respond to that?
These so-called accusations are being circulated by people who know nothing about economy. They do not understand the real reasons behind the scarcity of the dollar. Investors do not only import luxury goods.
They should have looked at Egypt’s imports list prior to making accusation and criticising importers.
80% of imports are raw materials and food commodities that are not available in Egypt. 70% of Egypt’s food is imported.
I wish importing could be permanently banned; however, there are no alternatives to replace such goods used in industry. Can Egypt dispense importing for now? The answer, of course, is it cannot. Agricultural products that Egypt exports, were originally imported seeds.
Some industries rely on foreign components in their production by 100%, what is the solution?
Importers cannot turn into producers overnight. There should be fiscal policies that go hand in hand with monetary policies set by CBE, which does not happen.
How much do luxury imports cost out of Egypt’s total imports?
In recent days, we read newspaper reports that luxury imports cost over $30 – $40bn.These reports intended to hide the failure of the financial and monetary policy of CBE in solving problems of dollar availability.
Who consumes pet food? The answer is guard and security dogs of the Ministry of Interior. This should cost only $15m.
The annual value of Egyptian imports is of no more than $80bn, where luxury goods cost over $500m. The remainder of imports are food commodities, intermediate and capital goods that are used in many industries.
What would happen if importing is banned? Will you be able to resolve the crisis and eliminate price hikes? Will there be an industry, such as an iron industry, without importing billet from Turkey, Ukraine or China?
Price hikes in the Egyptian market are not caused by importers, but rather by the failing policies that benefit only a handful of Egyptian businessmen on the account of the state’s budget.
Importers will not bear any price increases, but will pass the difference to consumers led by the high dollar exchange rate.
The next period will witness a significant rise in prices as traders will raise prices of goods in their warehouses, although they bought them for fewer prices. They understand the big rise in the dollar price, its scarcity, and difficulty to secure it in the future.
Importers criticise banks during the recent period as they cannot find dollars.
Importers resort to the parallel market, the black market, to buy their needs of the dollar in light of the difficulty to secure it from banks.
They get dollars from the black market for more than EGP 8.5.
The problem is not CBE alone. Recent restrictions reduced flows of expatriate remittances. The government needs to establish an appropriate price for the dollar at banks so Egyptians abroad agree to pump their savings into banks instead of the black market.
I wonder why these restrictions on remittances, especially that of capping the limit, exist in Egypt and no other country in the world. The depositor is on the territory of a foreign country, violating law there, will bring him before court. Egyptians receiving the money can also be sued if proven to violate our law. What do we fear then?
There is a lack of coordination among Ministries of Finance, Industry, and Supply with CBE. They even lack coordination among themselves.
Where do the exporting dollars go? This is another important point that must be discussed at the moment. CBE not keeping dollars of exporting has contributed to the worsening of the dollar crisis.
They get energy and fuel subsidies, yet sell their products at high prices, at the same time prices are declining abroad.
Raw materials imported by factories are not taxed. They buy foreign components without paying any taxes. This is a serious point that should be reconsidered in terms of the ratio of foreign component used in these industries.
The government itself is the largest importer of grains and oils, especially with regard to strategic commodities.
You accused exchange agencies of speculation in dollars, and said they were responsible for the crisis, even though you say there is lack of coordination between ministries and CBE.
Yes, exchange agencies bear part of the current dollar crisis, where they manipulate its price. Those agencies are smuggling tunnels to abroad, where they easily disregard CBE’s restrictions imposed in February.
Exchange agencies have recently stopped selling dollars. They are waiting for its price to increase, which we are seeing now as the price is EGP 8.60 – 8.80.
There is also smuggling food commodities, textiles and clothing. There is more than $20bn that leaves Egypt due to lack of good customs control.
Did you know that mobile components do not have customs? They get assembled in Egypt! Cars are also assembled in Egypt.
Automotive imports during the first nine months of the current year amounted to $3bn, including $2.5bn for the components to be assembled in Egypt, which are exempted from customs. Who is the winner here? Of course, in the interest of business leaders who are associated with ministers in the government.
Egypt does not have a dollar crisis, but there is manipulation.
You mentioned that traders raise the prices of goods, while they accuse importers of raising prices, and the state says it will issue an indicative list of imports. How do you see that?
Monopoly is the cause of price hikes. Prices are going down around the world. Commodities in Egypt are valued higher than their values abroad at rates ranging between 30% and 40%.
The imports indicative list that the state plans to launch will increase monopoly and will raise prices. I do not expect the dollar to decrease against the pound any time in the future under these policies.