CAIRO – An initiative aimed at tackling Egypt's key economic challenges and promoting dialogue between all societal factions and political forces is to be launched in a series of “societal dialogues,” announced Prime Minister Hisham Qandil at a press conference Sunday. “Our top economic priorities today are to achieve social justice, fight rising unemployment, end corruption, promote investments and revive the tourism sector,” said Ashraf El-Arabi, minister of Economic Cooperation. Overcoming economic challenges will only happen if society as a whole takes a unified stand and addresses the same economic concerns: this is the goal of the initiative, said Qandil. “The initiative is not solely addressed at economic experts and academic research centers. We invite the opposition to an open dialogue on the country's economy, and we believe in their patriotic intentions and good faith,” Qandil said. Qandil underlined that the economy's structural problems need to be addressed with swift reforms that sometimes can be perceived as harsh and burdensome on citizens, but are nonetheless prerequisites to fight chronic deficiencies such as the budget deficit. The “economic development” initiative comes in light of President Morsi's speech Saturday before the newly reconstituted upper house of parliament, the Shoura Council, where he announced that the government would set up a new state body, the Council on Economic Development. The new body would be tasked with restarting Egypt's economy, reaching higher growth rates and curbing public debt. The Egyptian pound plummeted to an eight year low against the US dollar on Sunday afternoon, following a currency auction in which the Central Bank sold $75 million to local banks. The dollar is currently priced to customers at LE6.365 plus a 2 percent administrative fee, one banker told Ahram Online, Sunday. At a maiden foreign currency auction on Sunday morning, the Central Bank sold US dollars to banks at a cut-off price of LE6.2425. The Central Bank of Egypt (CBE) had announced earlier on Sunday several procedures to preempt a looming foreign currency crisis, including putting a limit on corporate cash withdrawals at $30,000 per day, Reuters reported. It also placed a two per cent administrative fee on individuals who purchase foreign currencies. “The new fee is curbing the demand on the US dollar a little bit, but a lot of people are coming to buy it at any price,” a bank manager in downtown Cairo said. The local currency is currently trading at a price between LE6.32 to LE6.38 in banks and currency exchange shops. The previous low for the pound, in October 2004, was about 6.26 to the dollar. Egypt's currency market has been prey to uncertainty since a $4.8 billion loan with the International Monetary Fund (IMF) was postponed earlier in December. Rumors about a looming crisis and possibilities of Egypt ‘going bankrupt' have prompted individuals to rush to exchange offices to buy up the hard currency. The frenzy is augmented by the fact that Egypt's net international reserves, which have helped keep the exchange market stable since January 2011, currently stand at $15.03 billion. The CBE said Saturday it was introducing the new exchange regime to conserve foreign reserves, which it said had fallen to a critically low level. The new regulations also put a limit on the amount of US dollars banks can hold. Under the new rules, Egyptians banks are not allowed to hold long positions in US dollars of more than one percent of their capital. The Central Bank of Egypt said the country's foreign currency reserves are at a “critical” minimum level, AP reported. The bank said the reserves are at the minimum level needed to pay Egypt's international obligations. It did not give a current figure. In statistics from November, the reserves stood at 15 billion, less than half before last year. Reserves have tumbled since foreign investment dried up amid the country's turmoil the past two years. Much of the reserves have gone toward propping up the currency. EFG-Hermes, the largest investment bank in Egypt and the Middle East, forecast earlier that the pound will drop by the end of 2013 and reach 6.6 to the dollar. Egypt's bank and bourse will shut their doors on Tuesday to celebrate New Year's eve, according to statements by Egypt's Central Bank and the stock exchange. Work in these financial institutions will resume on Wednesday. — SG/Agencies
