The economic affairs committee at Egypt’s House of Representatives has released recently a statement following a closed meeting, attended by the governor of the Central Bank of Egypt (CBE) Tarek Amer to discuss the monetary policies and the evolution of the foreign reserves from 2010 to 2016.
Tarek Amer revealed that the recent decision of the floatation of the Exchange rate taken by the Egyptian government led to an increase of the foreign investments in the treasury bills up to USD 10.2 billion, while they reached less than USD one billion in October 2016. Also, the floatation resulted in an increase in the net trade dealings of the Arabs and foreigners in the Egyptian stock exchange, and a rise of the Egyptian market indexes, based on ‘Morgan index for the emerging markets. Moreover, the banks’ resources of foreign currencies rose up to USD 6.8 billion, and the total cash flows of foreign investors amounted to USD 900 billion.
According to the statement, Tarek Amer said that the CBE’s decision to float the currency came as a result of the decline in the foreign revenues in Tourism sector from USD 11 billion in 2010 to USD 3.4 billion in 2016. He added that the values of exports retreated from USD 24 billion in 2010 to USD 19 billion in 2016, while the imports increased from USD 49 billion in 2010 to USD 57 billion in 2016, leading to a gap between the exports and the imports and a negative impact on the payments balance. Tarek Amer, also, referred to the evaluation of the annual inflation rate since end of 1980s till now. The inflation reached 28 percent in 1989, 26 percent in 1991, 23 percent in 2008, and 23 percent in November 2016.
Tarek Amer previewed, during the meeting, the CBE’s plan to maximise the resources of the foreign currency, which included the attraction of the direct foreign investments, starting the share offering programme for the banks and the public sector companies in the stock exchange, and offering international bonds. In addition, the CBE aims to increase the resources of the foreign currency in the banking sector, returning the remittances of the Egyptians abroad to the banks, doubling the commodity exports within two years, and encouraging the Tourism.
Moreover, the CBE aims to reduce the trade balance deficit, and review the terms of the Egyptian component against the foreign component for the foreign companies, and setting a plan for decreasing the importing and tightening the terms of the importing licenses.
Ali Al-Meselhy, a chief of the economic committee in House of Representatives, stated that the monetary policy followed by the CBE was necessary to regain the confidence in the Egyptian economy and find an environment that supports the local investment and helps in attracting the foreign investment.
Al-Meselhy stressed on adopting a clear economic policy that encourages on increasing the exports, reducing the governmental costs, increasing the social solidarity, and protecting the neediest people to be able to bear the challenges arising as a result of the policy of the economic reformation. He added that the economic committee recommended the necessity of cooperation between all ministries to set a framework within the next period, and the necessity of activating the role of the monitoring bodies, especially the bodies concerned with the price control of the basic commodities.
