Egypt's Central Bank: Reserves at Critical Level

[BadJuju]

http://abcnews.go.com/International/...9#.UN8h0G80V8E

[don]

Re: Egypt's Central Bank: Reserves at Critical Level

Que FIRE, Debts R Us Division . . .

[shiny!]

Re: Egypt's Central Bank: Reserves at Critical Level

Most talk of chain reactions from soverign defaults focus on the PIIGS or Japan. What effect would a default by Egypt have on the world's financial system?

[lakedaemonian]

Re: Egypt's Central Bank: Reserves at Critical Level

Most talk of chain reactions from soverign defaults focus on the PIIGS or Japan. What effect would a default by Egypt have on the world's financial system?

I'm just guessing, but I would think financial system wise an Egyptian default would have less of an impact than Portugal defaulting after a quick look of relative GDP/external debt/imports/etc.

So I'm guessing the finance/economics side of an Egyptian default wouldn't lead to a cascade of defaults.

However, I would guess an Egyptian sovereign default could significantly increase the risk of social unrest in Egypt, which DEFINITELY would have potential to cascade across the region.

A couple of things I've noticed with Egypt:

It's oil consumption exceeded it's oil production a few years back making it a net oil importer(NG is a different story)

An attack targeting Egypt's tourism sector(circa 20% of export earnings) that mimics those in Luxor 97, Sharm el-Sheikh in 05, and Dahab 06 would likely have devastating consequences for the Egyptian economy as proven in all three previous attacks.

A single event targeting Egypt's tourism sector could really tip things over.

Just my best guess.

I wonder if the Saudis and Qataris could be expected to backstop the Egyptian economy?

Qatar has been quite active in Libya/Lebanon/Syria.

[seobook]

Re: Egypt's Central Bank: Reserves at Critical Level

Egypt pound hits record low under new currency regime

The currency adjustment, announced on Saturday, includes regular foreign currency auctions and appeared to signal an orderly devaluation to protect foreign reserves, according to bankers, after the central bank spent more than $20 billion over the past two years to defend the pound.
...
"The arms of central bank that used to be there will not make (the) market anymore, so it is for first time a real free market," said one banker who works in a treasury room.

[GRG55]

Re: Egypt's Central Bank: Reserves at Critical Level

I'm just guessing, but I would think financial system wise an Egyptian default would have less of an impact than Portugal defaulting after a quick look of relative GDP/external debt/imports/etc.

So I'm guessing the finance/economics side of an Egyptian default wouldn't lead to a cascade of defaults.

However, I would guess an Egyptian sovereign default could significantly increase the risk of social unrest in Egypt, which DEFINITELY would have potential to cascade across the region.

A couple of things I've noticed with Egypt:

It's oil consumption exceeded it's oil production a few years back making it a net oil importer(NG is a different story)

An attack targeting Egypt's tourism sector(circa 20% of export earnings) that mimics those in Luxor 97, Sharm el-Sheikh in 05, and Dahab 06 would likely have devastating consequences for the Egyptian economy as proven in all three previous attacks.

A single event targeting Egypt's tourism sector could really tip things over.

Just my best guess.

I wonder if the Saudis and Qataris could be expected to backstop the Egyptian economy?

Qatar has been quite active in Libya/Lebanon/Syria.

The Egyptian economy is more broadly diversified and more open to foreign investment than the other Arab economies. The Kuwaitis in particular have been long time, long term investors in many economic sectors in Egypt. And the Greeks and Turks have enjoyed no small success in the construction sector for decades.

As for tourism, it's been wrecked over and over again...most recently due to the Arab Spring fears. It does not take an event in Egypt or targeting Egypt to blow a temporary hole in it. 9/11 was devastating...much more than the attacks at Luxor or the coastal resorts. But it came back, as it always has. My fear this time is the potential rise of very conservative and militant Islamists may open the door to the widespread theft or destruction of the artifacts of a great deal of human history. The attitude is that anything that pre-dates Islam is irrelevant...such is the power in the belief that only the Quran contains "the Truth". At its extreme it results in Bamiyan, at a minimum it manifests as official indifference (participation?) to looting and theft on the scale seen in Iraq and Kabul.

Egypt's imports of crude oil to supply its refineries and its considerable imports of butane (mostly for domestic cooking gas supply) have been a drag on balance of payments for quite a few years.

[lakedaemonian]

Re: Egypt's Central Bank: Reserves at Critical Level

The Egyptian economy is more broadly diversified and more open to foreign investment than the other Arab economies. The Kuwaitis in particular have been long time, long term investors in many economic sectors in Egypt. And the Greeks and Turks have enjoyed no small success in the construction sector for decades.

As for tourism, it's been wrecked over and over again...most recently due to the Arab Spring fears. It does not take an event in Egypt or targeting Egypt to blow a temporary hole in it. 9/11 was devastating...much more than the attacks at Luxor or the coastal resorts. But it came back, as it always has. My fear this time is the potential rise of very conservative and militant Islamists may open the door to the widespread theft or destruction of the artifacts of a great deal of human history. The attitude is that anything that pre-dates Islam is irrelevant...such is the power in the belief that only the Quran contains "the Truth". At its extreme it results in Bamiyan, at a minimum it manifests as official indifference (participation?) to looting and theft on the scale seen in Iraq and Kabul.

Egypt's imports of crude oil to supply its refineries and its considerable imports of butane (mostly for domestic cooking gas supply) have been a drag on balance of payments for quite a few years.

Cheers for the coalface commentary on Egypt.

Having stood in the concave hollow reminders of the Bamyan Buddhas a few months back(and heading back again in a few) and looking at them out my window every day, it's pretty sad to think the Egyptian artifacts are at risk.