After the Central Bank of Egypt (CBE) reduction of the value of the Egyptian pound against the dollar on Thursday, concerns were expressed regarding the effect of the move on prices of basic commodities and inflation rates.
Head of Citizens Against Price Rises Association Mahmoud Al-Askalany said that CBE decisions will increase the prices of basic items in the Egyptian market. “In fact, not only the CBE’s, but all the government decisions are against the interest of citizens,” he said.
Al-Askalany explained that the government only takes into consideration the actions that negatively affect businessmen and investors, “but when it comes to harmful decisions for citizens, the government supports them”.
Although cabinet changes occurred in September, the governmental economic policies are still the same, Al-Askalany said, explaining that such decisions will “negatively affect the popularity of the president”.
Egypt’s foreign reserves, currently standing at $16.3bn, fell by $1.5bn in September, further threatening the country’s imports. An International Monetary Fund (IMF) report stated that the level of foreign reserves will cover Egypt’s import needs for three months.
The inflation rate increased by 2.8% in September 2015, the Central Agency for Public Mobilisation and Statistics (CAPMAS) stated. CAPMAS added that the annual inflation rate recorded 9.4% in September 2015, whereas the rate registered 7.9% in August and 8.3% in July.
Inflation rates and prices have already significantly increased than normal levels in July 2014 when President Abdel Fattah Al-Sisi cut spending on fuel subsidies in the FY 2014/2015 state budget from EGP 130bn in the previous budget to EGP 100bn. After the slash, car fuel prices increased by nearly 40%, as well as the prices of all products.