The sharp devaluation of the Egyptian pound, an increase in fuel prices and the three percentage point increase in the valued added tax late last year triggered a jump in the country’s price inflation to the highest in three decades.
But the consumer price increases are merely a symptom of a bigger problem, which is that the central bank has been expanding the money supply since the 2011 uprising, in part, by lending directly to the government. Getting this monetary creation under control is one of the most crucial components in Egypt’s reform programme. Failure to do so could be one of the biggest risks to the three-year loan accord that the government reached with the IMF in November.
For years, the country’s political turmoil made it exceedingly difficult for successive governments to cut spending or raise taxes, forcing them to resort to extraordinary means to finance the deficit.
The IMF projects that the government will increase its borrowings outstanding from the central bank to 668 billion Egyptian pounds (Dh134bn) this fiscal year, up from only 176bn in 2011-12.
The policy has contributed to exceptionally swift growth in the money supply. The broad money supply, M2, grew by 22 per cent in November from a year earlier (after excluding for the effect of the devaluation that month). The growth rate in the years immediately before the uprising was hovering at about 10 per cent.
An increase in the money supply means that more pounds are chasing the same number of goods and services. In general, inflation equals the rate of money supply growth minus GDP growth. So if the total amount of money in the economy increases by 18 per cent, for example, and GDP grows by 4 per cent, one might expect inflation of about 14 per cent.
Unfortunately, in Egypt’s case demand had been capped for so long by a rigid currency policy that the pound’s devaluation in November unleashed a surge in prices.
Inflation in February soared to an annual 30.2 per cent, its highest since June 1986, when it reached 35 per cent.
As prices increase, the amount the government must pay to provide subsidised commodities and services swells, heaping even more pressure on the budget and widening the deficit. Even though the government raised fuel prices in November, the weaker pound means the net amount it must pay to import these products from abroad rose.
Services also are starved of funds by the weaker pound. The cost of a ticket on the Cairo metro, which for political reasons has not been increased in 10 years, is now the equivalent of 5 US cents.
The rapid monetary growth over the previous years is ultimately what caused the pound to collapse against the dollar late last year. This is why it is critical that the government reduce its budget deficit and free itself from this vicious circle. It seems to be making all the right moves so far.
One of the main objectives mentioned in Egypt’s agreement with the IMF was adopting a monetary policy aimed at containing inflation that would be achieved by “controlling credit to government and banks”.
“Failure to tighten monetary policy sufficiently could lead to exchange rate and inflationary pressures and loss of reserves,” said an IMF staff report released in January.
The government says it will reduce its deficit and the need to borrow as much from the central bank.
“Short-term direct lending to the government will be used only in exceptional situations to bridge to financing from other sources with strict observance of the overdraft limits,” the central bank governor and finance minister wrote in a memorandum to the IMF.
The IMF projects that Egypt will reduce M2 monetary creation to 16.7 per cent in the fiscal year that will begin in July. It expects M2 growth to slow to 12 per cent by 2020-21.
It hopes this will reduce inflation to single digits by the 2018-19 fiscal year.
The government may feel the urge to relax its resolve as the political costs of the austerity measures increase. But it’s crucial that it keep up the momentum.
Patrick Werr has worked as a financial writer in Egypt for 26 years.
business@thenational.ae
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Global Fungi Facts
• Scientists estimate there could be as many as 3 million fungal species globally
• Only about 160,000 have been officially described leaving around 90% undiscovered
• Fungi account for roughly 90% of Earth's unknown biodiversity
• Forest fungi help tackle climate change, absorbing up to 36% of global fossil fuel emissions annually and storing around 5 billion tonnes of carbon in the planet's topsoil
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Essentials
The flights
Emirates, Etihad and Malaysia Airlines all fly direct from the UAE to Kuala Lumpur and on to Penang from about Dh2,300 return, including taxes.
Where to stay
In Kuala Lumpur, Element is a recently opened, futuristic hotel high up in a Norman Foster-designed skyscraper. Rooms cost from Dh400 per night, including taxes. Hotel Stripes, also in KL, is a great value design hotel, with an infinity rooftop pool. Rooms cost from Dh310, including taxes.
In Penang, Ren i Tang is a boutique b&b in what was once an ancient Chinese Medicine Hall in the centre of Little India. Rooms cost from Dh220, including taxes.
23 Love Lane in Penang is a luxury boutique heritage hotel in a converted mansion, with private tropical gardens. Rooms cost from Dh400, including taxes.
In Langkawi, Temple Tree is a unique architectural villa hotel consisting of antique houses from all across Malaysia. Rooms cost from Dh350, including taxes.
Fines for littering
In Dubai:
Dh200 for littering or spitting in the Dubai Metro
Dh500 for throwing cigarette butts or chewing gum on the floor, or littering from a vehicle.
Dh1,000 for littering on a beach, spitting in public places, throwing a cigarette butt from a vehicle
In Sharjah and other emirates
Dh500 for littering - including cigarette butts and chewing gum - in public places and beaches in Sharjah
Dh2,000 for littering in Sharjah deserts
Dh500 for littering from a vehicle in Ras Al Khaimah
Dh1,000 for littering from a car in Abu Dhabi
Dh1,000 to Dh100,000 for dumping waste in residential or public areas in Al Ain
Dh10,000 for littering at Ajman's beaches
Infiniti QX80 specs
Engine: twin-turbocharged 3.5-liter V6
Power: 450hp
Torque: 700Nm
Price: From Dh450,000, Autograph model from Dh510,000
Available: Now
Series info
Test series schedule 1st Test, Abu Dhabi: Sri Lanka won by 21 runs; 2nd Test, Dubai: Play starts at 2pm, Friday-Tuesday
ODI series schedule 1st ODI, Dubai: October 13; 2nd ODI, Abu Dhabi: October 16; 3rd ODI, Abu Dhabi: October 18; 4th ODI, Sharjah: October 20; 5th ODI, Sharjah: October 23
T20 series schedule 1st T20, Abu Dhabi: October 26; 2nd T20, Abu Dhabi: October 27; 3rd T20, Lahore: October 29
Tickets Available at www.q-tickets.com
Stat Fourteen Fourteen of the past 15 Test matches in the UAE have been decided on the final day. Both of the previous two Tests at Dubai International Stadium have been settled in the last session. Pakistan won with less than an hour to go against West Indies last year. Against England in 2015, there were just three balls left.
Key battle - Azhar Ali v Rangana Herath Herath may not quite be as flash as Muttiah Muralitharan, his former spin-twin who ended his career by taking his 800th wicket with his final delivery in Tests. He still has a decent sense of an ending, though. He won the Abu Dhabi match for his side with 11 wickets, the last of which was his 400th in Tests. It was not the first time he has owned Pakistan, either. A quarter of all his Test victims have been Pakistani. If Pakistan are going to avoid a first ever series defeat in the UAE, Azhar, their senior batsman, needs to stand up and show the way to blunt Herath.
ESSENTIALS
The flights
Emirates flies from Dubai to Phnom Penh via Yangon from Dh2,700 return including taxes. Cambodia Bayon Airlines and Cambodia Angkor Air offer return flights from Phnom Penh to Siem Reap from Dh250 return including taxes. The flight takes about 45 minutes.
The hotels
Rooms at the Raffles Le Royal in Phnom Penh cost from $225 (Dh826) per night including taxes. Rooms at the Grand Hotel d'Angkor cost from $261 (Dh960) per night including taxes.
The tours
A cyclo architecture tour of Phnom Penh costs from $20 (Dh75) per person for about three hours, with Khmer Architecture Tours. Tailor-made tours of all of Cambodia, or sites like Angkor alone, can be arranged by About Asia Travel. Emirates Holidays also offers packages.
Race card
5pm: Maiden (PA) Dh80,000 (Turf) 1,600m
5.30pm: Handicap (PA) Dh80,000 (T) 1,600m
6pm: Arabian Triple Crown Round-1 Listed (PA) Dh230,000 (T) 1,600m
6.30pm: Wathba Stallions Cup Handicap (PA) Dh70,000 (T) 1,400m
7pm: Maiden (PA) Dh80,000 (T) 1,200m
7.30pm: Handicap (TB) Dh100,000 (T) 2,400m
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence
Dr Amal Khalid Alias revealed a recent case of a woman with daughters, who specifically wanted a boy.
A semen analysis of the father showed abnormal sperm so the couple required IVF.
Out of 21 eggs collected, six were unused leaving 15 suitable for IVF.
A specific procedure was used, called intracytoplasmic sperm injection where a single sperm cell is inserted into the egg.
On day three of the process, 14 embryos were biopsied for gender selection.
The next day, a pre-implantation genetic report revealed four normal male embryos, three female and seven abnormal samples.
Day five of the treatment saw two male embryos transferred to the patient.
The woman recorded a positive pregnancy test two weeks later.
Tickets
Tickets start at Dh100 for adults, while children can enter free on the opening day. For more information, visit www.mubadalawtc.com.
England v West Indies
England squad for the first Test Cook, Stoneman, Westley, Root (captain), Malan, Stokes, Bairstow, Moeen, Roland-Jones, Broad, Anderson, Woakes, Crane
Fixtures
1st Test Aug 17-21, Edgbaston
2nd Test Aug 25-29, Headingley
3rd Test Sep 7-11, Lord's
COMPANY%20PROFILE
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F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
TO A LAND UNKNOWN
Director: Mahdi Fleifel
Starring: Mahmoud Bakri, Aram Sabbah, Mohammad Alsurafa
Rating: 4.5/5
The%20Mother%20
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Niki%20Caro%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Jennifer%20Lopez%2C%20Joseph%20Fiennes%2C%20Gael%20Garcia%20Bernal%2C%20Omari%20Hardwick%20and%20Lucy%20Paez%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203%2F5%3C%2Fp%3E%0A
Killing of Qassem Suleimani
The specs: 2018 Volkswagen Teramont
Price, base / as tested Dh137,000 / Dh189,950
Engine 3.6-litre V6
Gearbox Eight-speed automatic
Power 280hp @ 6,200rpm
Torque 360Nm @ 2,750rpm
Fuel economy, combined 11.7L / 100km
More from Neighbourhood Watch:
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
THE SPECS
Engine: 3.5-litre supercharged V6
Power: 416hp at 7,000rpm
Torque: 410Nm at 3,500rpm
Transmission: 6-speed manual
Fuel consumption: 10.2 l/100km
Price: Dh375,000
On sale: now
Meg%202%3A%20The%20Trench
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3EBen%20Wheatley%3Cbr%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3EJason%20Statham%2C%20Jing%20Wu%2C%20Cliff%20Curtis%2C%20Page%20Kennedy%2C%20Cliff%20Curtis%2C%20Melissanthi%20Mahut%20and%20Shuya%20Sophia%20Cai%3Cbr%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E2%2F5%3C%2Fp%3E%0A
COMPANY PROFILE
Name: Xpanceo
Started: 2018
Founders: Roman Axelrod, Valentyn Volkov
Based: Dubai, UAE
Industry: Smart contact lenses, augmented/virtual reality
Funding: $40 million
Investor: Opportunity Venture (Asia)
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
The specs: 2019 Haval H6
Price, base: Dh69,900
Engine: 2.0-litre turbocharged four-cylinder
Transmission: Seven-speed automatic
Power: 197hp @ 5,500rpm
Torque: 315Nm @ 2,000rpm
Fuel economy, combined: 7.0L / 100km
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
Find the right policy for you
Don’t wait until the week you fly to sign up for insurance – get it when you book your trip. Insurance covers you for cancellation and anything else that can go wrong before you leave.
Some insurers, such as World Nomads, allow you to book once you are travelling – but, as Mr Mohammed found out, pre-existing medical conditions are not covered.
Check your credit card before booking insurance to see if you have any travel insurance as a benefit – most UAE banks, such as Emirates NBD, First Abu Dhabi Bank and Abu Dhabi Islamic Bank, have cards that throw in insurance as part of their package. But read the fine print – they may only cover emergencies while you’re travelling, not cancellation before a trip.
Pre-existing medical conditions such as a heart condition, diabetes, epilepsy and even asthma may not be included as standard. Again, check the terms, exclusions and limitations of any insurance carefully.
If you want trip cancellation or curtailment, baggage loss or delay covered, you may need a higher-grade plan, says Ambareen Musa of Souqalmal.com. Decide how much coverage you need for emergency medical expenses or personal liability. Premium insurance packages give up to $1 million (Dh3.7m) in each category, Ms Musa adds.
Don’t wait for days to call your insurer if you need to make a claim. You may be required to notify them within 72 hours. Gather together all receipts, emails and reports to prove that you paid for something, that you didn’t use it and that you did not get reimbursed.
Finally, consider optional extras you may need, says Sarah Pickford of Travel Counsellors, such as a winter sports holiday. Also ensure all individuals can travel independently on that cover, she adds. And remember: “Cheap isn’t necessarily best.”
Killing of Qassem Suleimani
The biog
Date of birth: 27 May, 1995
Place of birth: Dubai, UAE
Status: Single
School: Al Ittihad private school in Al Mamzar
University: University of Sharjah
Degree: Renewable and Sustainable Energy
Hobby: I enjoy travelling a lot, not just for fun, but I like to cross things off my bucket list and the map and do something there like a 'green project'.
UAE currency: the story behind the money in your pockets
HEY%20MERCEDES%2C%20WHAT%20CAN%20YOU%20DO%20FOR%20ME%3F
%3Cp%3EMercedes-Benz's%20MBUX%20digital%20voice%20assistant%2C%20Hey%20Mercedes%2C%20allows%20users%20to%20set%20up%20commands%20for%3A%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Navigation%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Calls%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20In-car%20climate%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Ambient%20lighting%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Media%20controls%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20Driver%20assistance%3C%2Fp%3E%0A%3Cp%3E%E2%80%A2%20General%20inquiries%20such%20as%20motor%20data%2C%20fuel%20consumption%20and%20next%20service%20schedule%2C%20and%20even%20funny%20questions%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EThere's%20also%20a%20hidden%20feature%3A%3C%2Fstrong%3E%20pressing%20and%20holding%20the%20voice%20command%20button%20on%20the%20steering%20wheel%20activates%20the%20voice%20assistant%20on%20a%20connected%20smartphone%20%E2%80%93%20Siri%20on%20Apple's%20iOS%20or%20Google%20Assistant%20on%20Android%20%E2%80%93%20enabling%20a%20user%20to%20command%20the%20car%20even%20without%20Apple%20CarPlay%20or%20Android%20Auto%3C%2Fp%3E%0A
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
What are the influencer academy modules?
- Mastery of audio-visual content creation.
- Cinematography, shots and movement.
- All aspects of post-production.
- Emerging technologies and VFX with AI and CGI.
- Understanding of marketing objectives and audience engagement.
- Tourism industry knowledge.
- Professional ethics.
At a glance
- 20,000 new jobs for Emiratis over three years
- Dh300 million set aside to train 18,000 jobseekers in new skills
- Managerial jobs in government restricted to Emiratis
- Emiratis to get priority for 160 types of job in private sector
- Portion of VAT revenues will fund more graduate programmes
- 8,000 Emirati graduates to do 6-12 month replacements in public or private sector on a Dh10,000 monthly wage - 40 per cent of which will be paid by government
