Egypt repaid $35 billion in debt despite coronavirus crisis: Central Bank governor

CAIRO – 10 September 2020: Egypt managed to repay $35 billion in debt despite the economic repercussion of the coronavirus crisis, and provided 5 million jobs over the past five years, said governor of the Central Bank of Egypt (CBE).

In an interview with Ala Masoliety program on Sada El Balad, CBE Governor Tarek Amer said unemployment during the coronavirus crisis reached 700,000 in Egypt, compared to 30 million in the United States.

Concerning external debt, Amer said it rose from $48 billion when he took post to more than $111 billion currently. As President Abdel Fattah El Sisi named Amer as the CBE governor in November 2015, Amer affirmed that this period was critical as it required the implementation of some measures to save the economy.

Before the floatation of the Egyptian pound in 2016, Egypt’s foreign exchange reserves recorded only $800 million, which made the country on the brink of bankruptcy, Amer said. He added that Egypt imports wheat worth $2 billion annually and fuel worth $1 billion.

Concerning inflation, Amer said the CBE is mainly concerned with curbing inflation, noting that it reached 33 percent in the second quarter of 2017, marking its highest rise, due to economic reforms, and reached 4.2 percent currently, according to the Accountability State Authority.

Inflation rate of oils and fats decreased from 70 to 8 percent. For red meat, it decreased to zero percent and milk also decreased to almost zero percent, Amer said. Since October 2019, vegetables recorded a negative inflation rate, he added.

He made clear that the current development projects in Egypt are not financed by loans and that most of Egypt's foreign debts are long-term ones.

About the postponed loan installments, Amer said installments worth 2 trillion pounds were postponed for six months under a CBE initiative due to coronavirus crisis, dismissing the possibility of postponing them for another six moths.

He said the government now seeks to regain trust in business sector to encourage investors pump money into the Egyptian market.

He said Egypt's cash reserves reached 38 billion dollars and its GDP hit 5.6%.

Plastic currency

Amer said the country will print new polymer LE 10 ($0.63) and LE 20 (1.27) banknotes as planned earlier starting next year, noting that they would are not meant to cancel the original paper money.

In remarks to media, Amer said the new notes are made of better material so they can endure frequent use, adding that the new notes will be issued after the government moves its headquarters to the New Administrative Capital east of Cairo.

In July, Deputy Governor of the Central Bank Gamal Negm said that the plastic currency is different from the paper one only in quality, as the raw material for the new currency industry would be the 10-pound category of polymeric material, and there is no difference in the strength of the release.

Plastic currencies are produced from polymer, and was first used as currency-making material in Australia in 1988. In 1968, Australia began researching for a scientific solution to combat forgeries of the new decimal currency after it issued its $10 notes in 1966. The state spent 10 years in trials to overcome technical problems. In 1996, Securency International was formed as a joint venture between the Reserve Bank of Australia (RBA) and Innovia Films to market the technology.

“By 1998, all Australian banknotes were is- sued in plastic and by 2009 Securency was exporting to 25 countries, with more than 3 billion polymer notes in circulation,” notes CSIROpedia.

The Bank of England claims polymer is cleaner and more durable than other currency-comprising materials, and it allows the addition of extra security features. Polymer reportedly about 2.5 times longer than paper notes, although they take longer to biodegrade.

The environmental impact of the lifecycle of banknotes worth €3 billion produced in 2003 is equivalent to the environmental impact of driving a car around the world in 9,235 times, according to a study conducted by the Bank of Canada in 2016.

The study revealed that at the end of the lifecycle of paper money, it is usually torn and transported to the landfill. The polymer sheets extracted from the circulation are chopped into granules and used to manufacture every- day plastics, such as garden furniture.