With the relative calm that prevails in the Egyptian street after two weeks of protests, the nation's focus is shifting from politics to the economic situation which suffered heavy losses during the demonstrations.
After being closed for an entire week, banks resumed operations Sunday. Stock trading will remain suspended until next Tuesday. An announcement will be made about the resumption of trading 48 hours before the scheduled date, an exchange official told Reuters.
The first signs of a government response to the economic crisis emerged after the mini-ministerial meeting held by President Hosni Mubarak with the ministers of economic portfolios in the new government on Saturday morning (February 5th), where it was agreed to provide the basic needs of food and fuel for the citizens to restore the life back to normal and as soon as possible.
The meeting included Prime Minister Ahmed Shafiq, Central Bank Governor Farouq El-Okdah, Minister of Petroleum Sameh Fahmi, Minister of Social Solidarity Ali al-Museilhi, Minister of Trade and Industry Samiha Fawzi, and Minister of Finance Samir Radwan, and the Chief of the Presidential Staff Zakaria Azmy.
The ministers decided to send consumer products inspectors to the market to monitor and curb the rise in prices. They also allocated 1.5 billion Egyptian pounds to subsidise the purchase of wheat to counter any market shortage.
Gouda Abdel Wahid, an economic analyst, told Al-Shorfa that economic losses will be limited "especially if calm returns quickly to the street, which will restore a sense of confidence to Egyptian and foreign investors after the state of panic that hit the markets".
He expected "many investments will be withdrawn, not only from Egypt but from the Arab region as a whole. The first sign of mass exodus was a group of investments targeted to medium-sized enterprises in Egypt worth seven billion pounds. The funds were returned to Egypt after the global recession when relative financial stability returned to Egypt and some countries in the region."
Abdel Wahid said the Egyptian Union for Investors Associations is preparing an inventory of investor losses during the period, to examine compensation mechanisms.
"Losses among foreign investors are increasing daily because of the closure of factories, the suspension of all internal transportation and distribution activities, and suspension of import and export activities," Dr. Yaman al-Hamaqi, an economic expert, told Al-Shorfa.
Al-Hamaqi estimated daily losses at $350 million.
"Losses in the first two weeks reached almost $5 billion, in addition to $1 billion in tourism alone when most tourists left," he said. Tourism is a primary source of foreign currency for Egypt, and it accounts for more than 11% of gross domestic product.
According to the Central Bank of Egypt, nearly 12.5 million tourists visited Egypt in 2009, providing $10.8 billion dollars in revenue.
Regarding the decision to keep the stock market closed, Mustafa El-Gali, a financial analyst, told Al-Shorfa, "Khaled Sirri Siyam's (chairman of the Egyptian Stock Exchange) decision to continue the suspension on Sunday and Monday in light of developments is very good in order to maintain cohesion in this period and stop the bleeding that the bourse suffered last week."
El-Gali expects the stock exchange to resume trading by the end of next week if the situation remains calm, after several extraordinary measures to strengthen the performance of the stock market are taken. He said financial stability will return once banks reopen and the pound’s exchange rate stabilises, especially given the willingness of the Central Bank to support it, in the event of a drop in the pound’s value against the dollar.
He added, "The World Bank pledged $5 billion to Egypt in aid to ease the situation which will provide an additional safety valve for the financial markets and some reassurance for anxious investors. Considerable liquidity in the markets will restore stability."
Prices have increased between 10% and 25% for staple products such as food, cigarettes and cellular phone recharge cards.
Mohammed Risha, who owns a supermarket in the Giza area, said the rise in prices is normal because of the absence of the supplies and the absence of price controls in addition to the high cost of transportation.
"Drivers use security risks on the roads as an excuse to increase the transportation fee and fear that they might be subjected to beating and theft," he said.