Amid the difficult circumstances Egypt is currently facing, the new governor of the Central Bank of Egypt (CBE) is required to enforce a monetary policy that balances between three demands, said banking expert and board member of the Suez Canal and the Arab-Sudanese Bank, Mohamed Abdel Aal.
Abdel Aal highlighted these demands as, firstly, a reasonable inflation rate that takes into consideration not harming low-income classes, and secondly, a stable flexible exchange rate that balances between the demands of export promotion, tourism, and workers’ transfers abroad on one hand, and the high import bill on the other.
Thirdly, Abdel Aal said he must focus on building an interest rate structure that is commensurate with the level of economic activity and the demands to adjust liquidity, as well as the cost of financing projects, while guaranteeing suitable revenue for depositors.
Abdel Aal added that the most important task before recently appointed Governor Tarek Amer is achieving stability in the monetary policy, which is a very difficult task in light of the circumstances of the transitional phase.
He explained that, at the same time, billions of dollars should be spent on large and national projects that are necessary for development, without which there will not be an infrastructure for the upcoming generations to base their economic development on.
Egypt is witnessing a decline in most of its conventional resources of foreign exchange, most prominently, tourism, transfers of workers abroad, and export revenues, Abdel Aal noted. There is also a relative depletion of non-conventional resources due to the local, regional and global circumstances, like foreign investment and grants from the Gulf, he said.
The Egyptian pound will not rise because of the appointment of a new governor of the CBE, but rather as a result of stabilising the pound according to his ability, as well as the economic ministerial group’s, to coordinate to allow their policies to take effect, Abdel Aal concluded.