Merchants and government employees sarcastic about new bills
CAIRO: The New Year will see the introduction of two new bills to the lineup of denominations in Egypt’s currency. The announcement has been met with varied reactions from the public, banking officials and authorities on economics.
Farouq Al-Oqda, chairman of the Central Bank of Egypt (CBE), said during the recent Annual Arab Banking Conference 2006 held in Beirut that an LE 200 banknote will be issued in March and another LE 500 will accompany July 23rd celebrations.
But not everyone regards this as evidence of a strengthening economy.
Although such banknotes of high value will facilitate extended business transactions, they indicate a fall in the value of the Egyptian currency, said Dr Adbullah Shehata, assistant professor of economics and public finance at Cairo University.
Shehata pointed out that new banknotes of lesser value are losing their purchasing power and hence the Egyptian market needs banknotes of higher value. That s why you will find such big banknotes only with deteriorating currencies like the Lebanese lira and the Sudanese pound, whereas, for example, the biggest available US dollar is 100.
Another economist has quite a different opinion. These new banknotes will be mainly used in major commercial activities. Yet this reflects that the Egyptian economy is not mature enough to make effective use of the services the banking system offers like the credit card and payable checks, said Dr Samir Radwan, managing director, economic research forum.
But if you ask people on the street, the CBE announcement seems shocking and illusory.
My salary is LE 450 a month. I wonder if one day I will be obligated to pay the company I work for LE 50 to get an LE 500 banknote, Ahmed Abdul-Zaher, a civil servant, said sarcastically.
Storeowners believe the new banknotes may cause problems if they become widespread. We always find difficulties in finding change when a customer pays us LE 100 or an LE 50 banknote for a few grocery items. I don t know what I m going to face with LE 200 banknotes, said Ahmed Samir, a supermarket owner.
On the other hand, some merchants are happy with the new banknotes. I think an LE 500 banknote will make me feel safer when carrying a sum like LE 100,000 for selling and buying merchandise, said Ayman Zidan, a grains trader.
Banknotes with low value like the 5 or 10 piaster notes have almost been informally abolished. The state didn’t directly cause these little banknotes to diminish; but people s attitudes did. For example, we always neglect the 5 piaster change as if it is no longer of any value, explains Dr Hoda Zakaria, professor of political sociology at Zaqaziq University.
According to Zakaria, Issuing big banknotes will primarily serve fortune owners on the top of the socio-economic hierarchy.
Meanwhile, new banknotes may provide opportunities for smuggling. In the 1950s, the revolutionary regime eliminated banknotes worth LE 50 and LE 100 to inhibit smuggling.
With the LE 200 and LE 500, Egyptian currency can be easily smuggled, especially in Saudi Arabia during the Hajj and Umrah seasons (Islamic pilgrimage) and in other countries like Libya and Greece where Egyptian currency can be illegally exchanged on the black market, one lawyer said on condition of anonymity.
In 1834, a royal decree allowed the issuance of an Egyptian currency based on a bimetallic base. Two years later the Egyptian pound was minted and put into circulation. The pound was originally divided into 100 piasters, each of 40 para.
In 1885, the para ceased to be issued and the piaster was divided into tenths. These tenths were renamed milliemes in 1916. Banknotes worth 5, 10, 25, 50 piasters, 1, 5, 10, 20, 50 and 100 pounds are currently in circulation.
Earlier this year, a one pound coin was issued.