Egypt's Commodities Buyer Sees Bigger Food Bill
Source: Ahram Online 5/8/2012
Egypt, the world's biggest wheat importer, will hike its food purchasing bill for the fiscal year that starts in July from a year earlier to cope with rising global prices as its economy reels from months of political instability.
Nomani Nomani, vice chairman of the General Authority for Supply Commodities (GASC), said the state budget for fiscal year 2012/13 would include a food purchasing bill exceeding the $24 billion earmarked for 2011/12 that ends in June. "It [the bill] will be bigger due to higher costs of milling ... higher costs of domestic and international wheat purchases," Nomani told Reuters in an interview. He did not disclose the exact figure but said the bill was awaiting approval by the parliament.
Egypt's economy is in tatters after a series of violent clashes against the ruling military council since a popular uprising ousted longstanding Egyptian leader Hosni Mubarak and sent investors and tourists packing. Analysts say the most pressing economic threat is the slide in Egypt's foreign reserves as tourism and export earnings suffer from the unrest and capital flees the country. Foreign reserves have tumbled from around $35 billion at the start of 2011 to about $15.21 billion at the end of April.
But Nomani said wheat security for Egypt is a "red line" and the state has always given it a "priority" in terms of funding. "This sort of drop in foreign reserves is worrying but once stability returns, Egypt will be more attractive in terms of investments," Nomani said. "The required funding has to be made available to us (GASC)because this is a matter of food security which equates to national security." He added that GASC had stocks of imported wheat to last for about four months, and even longer if the local harvest was taken into account. "Imported wheat stocks cover until August, and local wheat purchases will roughly cover another four months depending on total amount of domestic purchases," Nomani said.
Egypt's local harvest purchase season starts in mid-April and ends in mid-July. Nomani said GASC eyes local purchases of at least 3 million tonnes this season, which is enough for four months. GASC is also looking into expanding its list of international wheat suppliers to include Hungary and Poland providing they meet its specifications, he said. Nomani added that a transfer of power to an elected president would pave the way for much needed economic stability but any vote delay would cause concern. A presidential election, which starts on 23-24 May, will choose a replacement for Mubarak, who was toppled in February last year. But many anti-army activists accuse the ruling generals of seeking to manipulate or delay the vote. The military has dismissed those allegations and says the elections will go ahead on time. "If things get worse in Egypt from the political perspective; if elections don't take place, it will be worrying," Nomani said.
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