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Egypt Government Sees Flexible Exchange Rate as Good for Economy – BNN Bloomberg

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(Bloomberg) —

Egypt’s government now favors a more flexible currency to support an economy that’s come under pressure from Russia’s invasion of Ukraine, a top official said.

Authorities already allowed the pound, which had been kept stable against the dollar for about two years, to weaken sharply in March, but investors and economists think it has much further to go to reflect its true value. Egypt’s currency is down more than 18% so far this year.

Investors are bracing for a second wave of depreciation while the government is in talks for a new loan from the International Monetary Fund, which favors a more flexible exchange rate. Asked on Tuesday about calls for a deeper devaluation, Hala Elsaid, Egypt’s planning minister, signaled openness to looser management of the currency.

“We as a government do agree that a flexible exchange rate is definitely good for the economy,” Elsaid, who’s also chairwoman of Egypt’s sovereign wealth fund, told Bloomberg Television in an interview.

The Arab world’s most populous nation is racing to buttress the economy after the war in Ukraine sent Egypt’s food and fuel import bills soaring and helped spur an exodus of foreign portfolio investors from the local debt market. 

It’s a reversal of fortune for the one-time darling of emerging markets. Drawn to Egypt’s high interest rates, a stable pound and its track record of market-friendly moves, foreigners had pumped billions of dollars into its debt market.

A leadership shakeup at the central bank last month only served to spur speculation about the currency outlook after the replacement of Tarek Amer, who’d been governor for about seven years and was seen as supportive of a stable pound.

‘Large and Ambitious’

“A large and ambitious IMF program is needed,” Bank of America Corp. economist Jean-Michel Saliba said in a report published on Tuesday. “We assume Egypt shifts to a flexible FX regime within an IMF program.”

BofA estimates Egypt’s gross external funding needs for the full year of 2023 at $58 billion, or about 14% of gross domestic product, and said it assumes the government can secure a $15 billion extended fund facility program from the IMF for three years. 

“Large external funding needs call for flexible dollar/pound,” Saliba said. “A flexible dollar/pound is key to help the current-account deficit compress over the coming period.”

Finance Minister Mohamed Maait has previously said that Egypt is asking for “definitely” less than $15 billion.

Elsaid said “the government is working very hard to increase our foreign exchange receipts” by means of an effort to boost exports, foreign direct investment and remittances from abroad.

Help has also come in the form of more than $22 billion in deposits and investment pledges from its energy-rich Persian Gulf allies.

Abu Dhabi wealth fund ADQ and a unit of Saudi Arabia’s Public Investment Fund have so far pumped roughly $3 billion into the country, snapping up government-held stakes in prominent companies in deals facilitated by the Egyptian sovereign fund.

More such agreements are expected, possibly including the landmark sale of stakes in some firms held by Egypt’s army. The government is also promising new policies on state ownership, limiting its involvement in some areas and exiting others, as it seeks large-scale investment from private enterprise.

Elsaid said Egypt has set up a “pre-IPO” fund, with the aim of holding public stakes and working with strategic investors ahead of public offerings.

Egypt will revisit its forecasts for the economy by next month to account for shocks from abroad, she said. The country has recently benefited from improvements in FDI and exports, according to Elsaid.

(Updates with economist comments starting in eighth paragraph)

©2022 Bloomberg L.P.

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Minimum wage to hire higher-paid temporary foreign workers set to increase

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OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

The Canadian Press. All rights reserved.

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PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

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OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

The Canadian Press. All rights reserved.

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Statistics Canada says levels of food insecurity rose in 2022

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OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

The Canadian Press. All rights reserved.

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