On April 11, 2022, the World Gold Council announced that the Central Bank of Egypt had bought 44 tons of gold, worth about $2.5 billion, bringing its total gold holdings of 125 tons, worth $7 billion.
The experts asked about the composition of the foreign currency reserves in the Central Bank of Egypt, and how many of them are temporary deposits and treasury bonds due for payment?
Researcher Nayel El-Shafei pointed out that on March 31, 2022, the total foreign exchange reserves at the Central Bank of Egypt amounted to $37 billion, of which $5 billion was a Saudi deposit that was deposited the previous day.
Economist Hani Tawfiq considered that the government’s purchase of 44 tons of gold by deduction from the bank’s cash reserves was a grave mistake.
According to the World Gold Council, the volume of gold at the central bank increased by 54% to reach 125 tons by the end of February, or 19% of the total foreign exchange reserves.
Al-Sisi had said that “Egypt in 1960 lost its gold cover in the Yemen war, and that Egypt in 1967 did not owe a single pound, and that debts began in 1968, in a section dated January 18, 2018, and observers considered that the ruin in the Central Bank and that the balance is negative 50 billion pounds as a result of the military coup led by Sisi handing over Egypt’s huge bounties of gold, oil and water to the benefit of the occupying Zionist entity and the colonizers, noting that Egypt is awaiting bankruptcy and millions are expected to seek refuge abroad.
Dr. Hani Tawfik, professor of economics, revealed that the shortage of dollars in banks led to a serious problem related to the suspension of factories, considering through (Hany Tawfik) on Facebook that the decision to buy gold is incorrect for four reasons:
The first is that gold is at historically high price levels.
The second is that the price of gold as a safe haven will decline with the end of the war with Russia.
The third is confirmation of the second, which is the expectation of a decrease in the price of gold with the increase in the interest rate on the US dollar for the inverse relationship between the price of gold and the interest rate.
Fourth, and the most important of which is that the dollars with which gold was purchased was a fortiori directing them to operate the suspended factories in Egypt due to the lack of dollars in the banks.
The economic expert, Dr. Mahmoud Wahba, what Hani Tawfiq said about the Central Bank’s purchase of gold by about 2 billion dollars, he said that “gold is illiquid and has no monthly or annual return, and that an increase in the burdens of a lack of liquidity, you have a liquidity shortage, so increase it.”
He added, and if the goal was to buy a reserve component that preserves the value of the pound against expensiveness, why did you not buy US bonds, which are in fact what determines the value of gold through the interest rate?
He explained that the bonds are liquid and give a monthly or annual return, as if fate were telling you, the price of gold has decreased since its purchase in February and the interest rate has risen.
Biggest Debt Client
The Project on Democracy in the Middle East (POMED) added in a report in April that Egypt has become the largest client of the International Monetary Fund after Argentina.
The “Labomed” report stated that the Egyptian government has spent the bulk of its available revenues in recent years on giant projects that have a symbolic rather than economic value, such as the New Administrative Capital project, which is worth $58 billion in the desert outside Cairo.
This is in addition to weapons holdings whose exact value is unknown, but made the country among the top 5 buyers of weapons in the world, a nuclear reactor worth $25 billion to produce energy in a country that has a surplus of electricity, and an increase in the Suez Canal capacity of $8 billion, and did not bring an increase Notable in transit fees, which rose to only $5.8 billion in 2020 from $5.6 billion in 2017, according to the report.
The site indicated that the total spending in the 2020-2021 budget amounted to $93 billion, of which $30.7 billion went to debt service.
Source: بوابة الحرية والعدالة by fj-p.com.
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