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Sunday, April 21, 2013

Tough times in Egypt

Another story I've been meaning to post for a few days.... Egypt is starving.
Egyptians are getting hungry. The fall of the Egyptian pound to just 60% of its 2012 exchange rate against the dollar has priced everything but bread out of the reach of the poorer half of the population, and the bread supply is now at risk.

The news late last week that Libya and Qatar may lend US$5 billion to Egypt was overshadowed by reports that Cairo owes $5 billion to the oil companies that produce oil and gas on its territory. Half of the amount is overdue, and oil companies reportedly expect to wait years for payment. Egypt's arrears on trade credits from suppliers of oil, wheat, and other essential items probably exceed its $8.8 billion cash reserves, leaving the country flat broke.

With a trade deficit running at $32 billion, the Libyan and Qatari money covers just a couple of months; stiffing the oil companies might have covered the past couple of months. If the Egyptian government finally comes to terms with the International Monetary Fund for a $4.8 billion loan, that will cover another few weeks.

Egypt's finances have been in free fall since the mid-2000s, when prices for food and other essential imports soared while export earnings for cotton and other products stagnated. At $60 billion, the country's trade deficit is a seventh of its gross domestic product. The 40% fall in the exchange rate of the Egyptian pound from 6 to the dollar late last year to 8.25 on the black market last week will raise the cost of imports even further.

The half of Egyptians that lives on $2 a day no longer eats beans, let alone milk products. 
It gets worse, and there doesn't seem to be much hope for the foreseeable future. Read the whole thing.  Maybe they need to give up on destroying the Jewish state.

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At 12:55 AM, Blogger Empress Trudy said...

When Zimbabwe achieved black rule in 1980, Mugabe went on a program of ethnic cleansing of whites and middle class blacks, land theft and systematic destruction of the infrastructure and economy. What was once a country that exported wheat and other crops slid into famine. By 2000 the GDP was half what it was in 1980. Fascist dictatorship worked for the ruling elite. That's more or less the arc that Egypt will follow. Except that instead of growing food, Egypt has imported half its food requirements for the last half century. Now w/o money to buy food and fuel and no money to subsidize food prices for the poor, they are royally screwed. It will be biblical.


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