Mohamed Abdelaal, member of the board of directors of Suez Canal Bank and a banking expert, said that Tarek Amer, the CBE governor, has taken responsibility for many difficult and brave decisions during his first two years in office.
He explained that the pound flotation was an earthquake that shook the black market, making the phenomenon of dollarisation completely disappear, as the banking system regained its prestige and dignity in the capital market. For the first time, the activities of the Egyptian economy are happening through one unified and realistic exchange rate. The decision also plays a major role in Egypt’s success in obtaining a $12bn loan from the International Monetary Fund (IMF).
“Amer took office when the black market was in control of the foreign exchange market, dollarisation was common, banks’ ability to provide the needs of their customers was weak, there was a great shortage in foreign exchange at banks, Egyptians’ transfers abroad depleted and were leaked to the black market, the foreign exchange reserves were consumed and went below the minimum to cover the needs of import, the direct foreign investment flow stopped, foreign investments in the Egyptian stock exchange, treasury bonds and bills were weak, the IMF was hesitant in terms of providing Egypt with the loan, and Egypt’s ability to issue and market dollar bonds in global markets was undermined as well,” Abdelaal said.
He then added that all of this completely changed after the brave decisions made by the CBE in the era of Amer, as Egypt now has a unified exchange rate determined according to supply and demand mechanisms. The black market has completely disappeared, foreign exchange started flowing, foreign exchange reserves increased, Egyptians’ transfers increased, revenues from tourism increased, the importation bill declined, non-petroleum exports increased, the trade balance deficit declined, direct foreign investment increased in government debt securities, the balance of payments has a surplus of $13.7bn, trusts increased in banks, and all stock exchange indices improved and reached historical levels.
According to Abdelaal, the CBE adopted several important initiatives with long-term positive impacts such as the initiative to finance medium and small activities, and the initiative to support tourism, in addition to expanding the scale of the real estate initiative and activating the monetary policy to target inflation, whether through increasing the interest rate or increasing the mandatory reserve rates.
He pointed out that all of these decisions and policies eventually aim to support the process of economic and monetary reform as well as control inflation and improve national economy indices. For these reasons, Amer was chosen as the best central bank governor of the year, Abdelaal concluded.