Clarification from the Governor of the Central Bank of Egypt regarding the devaluation of the pound

The Governor of the Central Bank of Egypt, Tarek Amer, said that the new decisions related to monetary policy received a very positive international response, explaining the importance of these decisions to protect the country’s financial capacity.

The Egyptian pound fell about 14 percent against the dollar to 18.7 pounds against the dollar at midnight on Monday and Tuesday.

Amer explained that in these difficult international conditions, these decisions have two main goals, which are preserving Egypt’s financial capacity and maintaining foreign exchange liquidity to ensure the needs of Egyptian society, noting that the priority of the Central Bank is to provide cash liquidity. The policy in question, must meet the international requirements of the international market and our international partners, and we need to finance most of our needs.

He pointed out that changes in exchange rates are a process of correction, because the exchange rate in Egypt is liberal and thus reflects the monetary and economic conditions of the world, and in Egypt we are part of the world.

He added: “It is no secret to anyone that the world has been very difficult in the past two years, but in coordination between the Central Bank and the government and with the support of President Abdel Fattah El-Sisi, we succeeded in the first crisis. Even in developed countries, it caused a rise in commodity prices, which led to the bankruptcy of companies. Many small companies, but we in Egypt played a prominent role during this period, and gain the appreciation of international observers, by anticipating strong measures against Corona, the government and the Central Bank are also able On defending the economy’s capacity because individuals, and what we consider large, medium or small production enterprises, given the Covid-19 crisis, the balance of payments, Egypt’s foreign exchange earnings, the pace of development, and price levels.

inflation level

The Governor of the Central Bank affirmed that the economic reform decisions that were taken in Egypt five years ago contributed to reducing inflation levels, which gave a great boost to development efforts. The 2016 venue provided Egypt with enormous resources, from foreign investment, to the rise of the Egyptian Stock Exchange, to the increase in remittances from Egyptians abroad, as confidence multiplied.

“We pay attention to the balance of payments and Egypt’s resources of foreign exchange and take appropriate decisions to protect and protect these resources, which is the blood that flows through the economic arteries, and provides goods and services to Egypt because we rely heavily on buying services and goods from abroad, these decisions were successful and Egypt gained a good reputation in the international market, enabling it to provide resources for the daily life of the community and all development projects.

Amer added, “The stability of the currency is very important to the Egyptian economy, and we have succeeded in overcoming the Covid-19 crisis, protecting society from price shocks, and maintaining the exchange rate by interfering with international reserves that resulted from the reform of the Central Bank.

” This is the most important part of the plan, and one of the advantages that stands out is that Egypt is one of the few countries in the world that has not experienced price increases like many countries, so we were very successful during the Covid-19 crisis and we have international credentials, in the Egyptian government’s policy to deal with COVID-19, and in these important policies in this regard, the balance between lockdown and no lockdown, so there is a lot.

Institutions that continue to operate and do not lose their jobs, and in coordination with the Minister of the Presidency of the Republic, a lot of money was pumped into the Egyptian market to help all institutions, instead of losing the ability to spend on employment and production, we took about 21 initiatives during the Covid-19 crisis, including prices Low interest to borrowers, as well as massive financing to the private sector, totaling £600 billion by 2020, to boost private sector credit.

The Governor of the Central Bank referred to the outbreak of the Federal Reserve crisis in the second half of 2021, when the Federal Reserve began to withdraw dollar liquidity from global markets, which led to deflationary policies, and liquidity began to escape from emerging markets, including Egypt, and given the crisis Finance. Strong reserves in the Federal Reserve During the monetary tightening crisis implemented by the banks, we were able to pay off all our international obligations on time and meet all the requirements of the Egyptian market, and in fact we maintained the stability of the currency indicators.

Ukraine crisis

Amer said in a press conference, that the sudden crisis in Russia and Ukraine cast a shadow on the instability of the global economy, and thus also affects Egypt as part of the international market, “We deal with the international market every year. 100 to 1500 100 million dollars in imports.” and so on.

He stressed that the measures that are being taken aim to maintain the confidence of foreign investment and the confidence of the international financial market in Egypt, in addition to protecting Egypt’s resources from foreign exchange through the continued transfer of Egyptians residing abroad.

The Governor of the Central Bank clarified that the corrective measures taken in the foreign exchange market reflect the development of the global and Egyptian economic market conditions and events, pointing to the positive reports of international institutions regarding the adjustment of the exchange rate level in Egypt as it was compared. with other countries. become competitive. Competitiveness in exports and pricing of imports at the right price.

With regard to interest rates, the Central Bank Governor explained that inflation has been under control over the past seven years, and we have kept it at 3.5% and 4% for a long time, stressing that interest rates have not changed since 2017, rather they have paid more. Interest in the industrial sector, construction and building, etc. The department offers subsidized prices.

The Governor of the Central Bank of Egypt explained that inflation in Egypt comes from abroad and is not a result of current policy issues, stressing that raising the interest rate is to encourage citizens to save. An interest of up to 18% on the certificates issued by Egyptian banks today to compensate Egyptian depositors for the impact of the rise in global commodity prices and meet the requirements of society, explaining that the investment certificates amount to about 30 million customers.

The governor stressed that monetary policy will always reflect global and international developments and the Egyptian market, noting that our goal is to protect foreign exchange resources in Egypt in order to provide Egyptian citizens with basic commodities and required strategies, in addition to protecting foreign investment channels that help provide foreign exchange, explaining that the procedures related to By providing wheat reserves, it will help deal with the impact of the current crisis that the world is going through, and it will take Egypt several months to secure this strategic commodity.

Amer indicated that after implementing the corrective measures in 2016, remittances from Egyptians abroad increased from $12 billion annually to $31 billion annually, part of which we depend on the Egyptian economy. for development needs.

The governor stressed that the bold decision to support the Egyptian economy was taken within the framework of continuous coordination and consultation between the Central Bank and the government to take the necessary decisions to protect various financial resources in the coming period.

In his speech, the governor referred to the strength of Egyptian banks that continue to finance all aspects of development on the Egyptian lands, and their high level of liquidity as it is higher than others in European countries and the Middle East. The strength of the banking regulator by saying: “We have the ability to sustain the performance of the Egyptian economy … and meet its needs,” adding that we are going through very difficult situations and challenges, but we are applying scientific measures to support the performance of the Egyptian economy. Basic principles and rules of economy and society

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