Mohamed Abdullah - Cairo

In conjunction with the initiatives of the Central Bank of Egypt to pump more liquidity to face the specter of the recession, the shops of major shopping centers in Greater Cairo (Cairo, Giza, and Qalyubia) announced the announcement of dramatic discounts, coming weeks before the official start of the "winter oocazione" period, which starts in 27 This January.

Shop owners hope to motivate citizens to buy by advertising through text messages about discounts of up to 70%, after months of slow selling, and recession in the markets.

The first seasonal seasonal liquidation "Winter Oxyzone" for 2020 will start from January 27 for a month, with the aim of stimulating the sale and purchase movement after a period described by traders as "winter deeds."

The head of the ready-made clothes division of the Cairo Chamber of Commerce, Yahya Al-Zananiri, attributed the start of some of the shops prematurely cuts to the fact that the ready-made clothes markets were strongly affected by the recession.

Al-Zananiri confirmed to Al-Jazeera Net that the volume of sales in the winter season did not exceed 20% so far, but with the end of the sales, we can reach 50 or 55%, noting that the season of cuts stimulates the market in a good way, but it is less than expected.


Central Bank Initiatives

This comes in conjunction with the Central Bank of Egypt offering many initiatives, whether for financing or lending to individuals and companies, in addition to reducing interest time and time again, with the aim of pumping more liquidity and pushing consumers to buy.

And the central bank reversed the interest rates, and adopted the so-called monetary easing policy (reducing the interest rate), which fell from the highest level of 20% to 6.5% through six decisions, in an attempt to revitalize the economy.

Economists have questioned the feasibility of some of these initiatives based on lending, as temporary solutions, while others welcomed them, stressing that they are consistent with the bank's role in stimulating markets and lifting them out of recession.

Al-Zananiri believes that the central bank's initiatives are a more formal rather than a radical solution, pointing out that they, as manufacturers, are part of the national economy, and when it strengthens, we will strengthen with it, and we try to adapt by reducing costs and profits.

Al-Zananiri attributed the recession to the high prices due to the high costs of production (electricity, gas, fuel, and wages), and the weak purchasing power of the Egyptian consumer, in addition to the fact that clothing is a backward priority over food, drink, school expenses, bills, and other life priorities.

Recent data for last December showed the non-oil private sector downturn, with the PMI recording 48.2 points, ending a long year of continued deflation.

However, the annual rate of inflation in cities returned to increase after months of decline, to record 7.1% for last December, compared to annual inflation for cities in November 3.6%, an increase of 3.5%.


Creative solutions

In turn, economic expert Sen. Fahmy, a member of the Economic Committee of the House of Representatives, praised the central initiatives, saying, "The bank launched several different initiatives, such as those relating to troubled companies, housing and tourism, to finance small and micro projects, and another to lend to buy cars."

She indicated in statements to Al Jazeera Net that such initiatives come in conjunction with a recession in the markets and a contraction in the economy, as is the case in many countries of the world, and the central bank cannot close its eyes to what is happening.

Fahmy stressed that the initiatives are important in such difficult economic conditions for the region and the world, and protect companies, factories and their employees from collapse and layoffs, and contribute to increasing their production by paying off their debts or updating their equipment.

She denied that there would be risks from increasing lending because "the Egyptian banking system is professional, expert, and one of the best banking services in the world", as the bank makes its decisions after comprehensive feasibility studies, and it is not a zakat institution, according to its description.


Temporary solutions

For his part, former Minister of Planning and International Cooperation Amr Darraj said that the government's economic policies and austerity measures related to the IMF loan have resulted in negative economic and social impacts so far, according to the official state data.

In his talk to Al-Jazeera Net, Darraj considered that the procedures and initiatives of the Central Bank for lending to citizens can be applied in countries whose citizens enjoy high incomes, but in a country like Egypt there are concerns about borrowing and the ability to pay because their income is limited, and this will exacerbate the government debt crisis, and then individuals .

He revealed that these factors in the long run will lead to an increase in the recession, and the crisis lies in that there is no increase in GDP, and thus income does not improve, and purchasing power remains limited, and poverty increases, and if some people can pay, others will not be able.

Regarding the recession, he pointed out that in a country like Egypt, the economic recovery is usually driven by internal consumption, given that the market size is large (one hundred million consumers), but as a result of the economic policies that were followed during the past years, the poverty rate increased to 60%, according to the bank’s data International last year.

The former minister added, "Therefore, there is not a sufficient percentage of Egyptians to buy and create economic boom, which motivates factories and companies to increase production, and consequently a recession has occurred that sellers and manufacturers want to get rid of the goods at any cost."

He concluded by saying, "And this led to what we call inflationary recession, because prices are still higher than they were before the float."


Against lending

For her part, House member of the Economic Affairs Committee Sarah Jad opposed the policy of lending or expanding it, noting that the interest with the length of time turns to another amount, which increases the risk of not being able to pay, stressing the need to pay attention to increasing production and export.

In her speech to Al-Jazeera Net, she demanded to overcome the obstacles facing the Egyptian investors, and give them facilities, praising the investment committee formed by the Prime Minister, because the existing obstacles push some investors to invest abroad, stressing that the priority should be to facilitate local investment, "and when the Egyptian invests, the foreigner will come" .

She stressed the need to increase national income to raise the standard of living of the individual and the ability to spend, especially as Egypt is going through a difficult economic stage, despite its improvement, and affects the middle class, which is the main driver of the Egyptian economy.