Many Egyptians are concerned about the central bank’s recent decision to raise interest rates and the pound to more than 18 against the dollar on Tuesday, though the government stressed the importance of the measures in order to “protect the country’s financial capacity.”
On the other hand, the government is trying to provide an optimistic explanation for the measures that were described as harsh and sparked controversy in the streets of Egypt during the past two days.
The Governor of the Central Bank of Egypt, Tarek Amer, said that the new decision regarding monetary policy “has generated very positive reactions at the international level.”
Amer explained that these decisions have two main goals, namely protecting Egypt’s financial capacity and foreign exchange liquidity to ensure that society’s needs are met under these difficult international conditions.
He added: “In response, the government announced a series of decisions aimed at tackling the current crisis and mitigating its impact on citizens, including allocating 130 billion pounds to address these effects and the decision to issue a new annual rate of return close to 18% annual savings vouchers, and increasing control On bread, pricing a 90-gram loaf so it’s less than a pound, and many other measures.
On raising interest rates and their impact, Rashad Abdullah, an economist, head of the Egyptian Forum for Economic Research and a professor of investment and international finance, explained that the decision is “an important step in the interest of citizens because interest is an interest rate.
” It is one of the tools of the Central Bank to promote development and reduce inflation, and raising the interest rate by 18% can encourage citizens, and its high liquidity, which leads to a high demand for the product, and thus the price decreases and the inflation rate decreases.
He believes that the government’s decision “is a good step, especially since the government’s measures to stop the export of some products and strict restrictions on bread allow owners of savings to increase their incomes and live a better life.”
He continued: “In terms of the exchange rate, Egypt’s decision to float the British pound, which makes the price of the dollar on the basis of supply and demand, is defective, as the supply of the dollar suffers from a problem due to the low number.
From Russian and Ukrainian tourists, tourism revenues decreased, especially due to The fact that 34.5% of Egyptian tourists from these two countries, even tourists from other countries, have decreased due to poor air traffic, which has reduced the number of Egyptian tourists.People passing through the country due to the unstable global situation, foreign exchange earnings from tourism, and therefore Dollars are in low supply, as long as the supply is below the norm known to be high prices.
Abdullah pointed out that “the increased demand for the dollar is due to the fact that Russia and Ukraine produce 31% of the world’s wheat, and Russia is the largest producer of fertilizers in the world, which affects agriculture in all regions of the world, and with the rise in oil prices. Prices, freight and transportation have made And insurance costs countries pay much more to buy wheat, and therefore the demand for the dollar increased and its price rose.”
Economists point out that “with the Russo-Ukrainian war, parallel black markets began to appear again in Egypt, depriving the state of these resources, allowing workers abroad and those with dollars to sell in the market instead of rising in the banks.
Profit, the state is deprived of Egypt’s financial resources to buy hard currency for basic commodities that Egyptian citizens need, which is money that black market dealers may use to finance drugs or terrorism and other things, not development, so the solution is to raise the price of the dollar, so that people pay to put that money in the coat of the country you use To buy basic commodities, a decision that prevents dollars from hoarding because of its high price against the pound. Citizens transfer dollars from banks to sell them to the state at a very good price to make a profit rather than hoarding them.”
And on the possibility of the pound/dollar returning to gains, Abdullah said: “I don’t think the Ukraine crisis will end anytime soon as the war seems to be protracted, which could raise the price of a barrel of oil to unprecedented levels.
” The numbers so the war is not It is still ongoing and it is not even possible to talk about the fall of the dollar, as the war will end and its continuation may lead to another drop in the value of the pound, especially if there is a global food crisis and wheat prices. Egypt is an economically resilient country that reacts to data, and the decision depends on the circumstances and duration of the conflict between Russia and Ukraine or the conflict between Russia and the West.
He suggested that the head of the Egyptian Forum for Economic Research play a supervisory role, establish a hotline to report any abuses or violations, grant officials the status of judicial police, and take advantage of the situation in which a quick and deterrent ruling is issued against them. Deceive the people, which is, in his opinion, a complementary measure, in order to gain high credibility before the government takes action.