2024-08-19 09:40:00
12:40 noon
Monday, August 19, 2024
Written by Manal Almasri:
Central Bank Governor Hassan Abdullah resumed managing 5 very hot papers after renewing his contract for the third consecutive one-year period to maintain exchange rate flexibility and economic stability.
Today, the Official Gazette published a presidential decree extending Hassan Abdullah’s position as Acting Governor of the Central Bank for a period of one year, starting on August 18, 2024.
Abdullah took office as central bank governor on August 18, 2022, after Tariq Amer submitted his resignation one year and three months before the end of his second term, at a time when Egypt was experiencing a deterioration in foreign exchange and interest rate differentials. Currency black market before crisis recent reforms.
In the next few lines, Masrawi discusses the 5 most important documents on the desk of Central Bank Governor Hassan Abdullah
International Monetary Fund loan
As Egypt’s representative on the IMF Board of Directors, Hassan Abdallah is responsible for continuing consultations with the IMF at every review of the program.
In April last year, after Egypt’s central bank announced exchange rate liberalization, the International Monetary Fund agreed to increase Egypt’s loan amount from US$3 to US$8 billion.
The IMF completed two short-term reviews last April and released $820 million to Egypt, and Egypt received $820 million from the organization after the third review concluded a few days ago.
The International Monetary Fund will begin its fourth review of the economic reform program next month to prepare for the disbursement of approximately US$1.3 billion in loans.
Before each disbursement is made, the IMF reviews the economic reform program to ensure that Egypt continues to implement the policies agreed upon in the loan, the most important of which are exchange rate flexibility, rationalization of fuel subsidies, and state support for the private sector Make space.
exchange rate
Hassan Abdullah’s decision to implement exchange rate liberalization in March last year, which led to the unification of exchange rates and the elimination of the parallel market for currency transactions, is one of the most important documents that falls on the shoulders of the central bank, the stabilization of exchange rates and the exchange rate of foreign currencies against the pound The existence of a single price for transactions.
In 2022 and 2023, after the Russia-Ukraine war, about 22 billion U.S. dollars of foreign investment collectively withdrew, exacerbating the foreign exchange crisis, and Egypt suffered from the spread of the black market in currency transactions.
During the fourth wave of exchange rate liberalization, the dollar rose by about 60% against the pound, from 30.94 pounds on March 5 to nearly 50 pounds against the pound on the first day of exchange rate liberalization, and fell to about 48.76 pounds in the mid-term. .
curb inflation
One of the central bank’s most important goals is to control inflationary pressures—the rate at which prices rise—in order to achieve price stability.
Urban inflation fell for the fifth consecutive time, from 27.5% in June to 25.7% in July last year. After reaching a record 41% in June 2023, the annual core inflation rate continued to slow from 26.6% to 25.7% in July last year. 24.4%.
Central Bank Governor Hassan Abdullah earlier said the central bank’s goal is to curb inflation, not the exchange rate, as it is the most important disease affecting any country’s economy.
interest rate
Like other central banks around the world, the central bank controls inflation through interest rates.
In order to curb inflation, the central bank has raised interest rates by 19% in the past two and a half years, including a 6% increase in March last year. Deposit yields reached a record high of 27.25%, and deposit yields reached 28.25%. .
International financial institutions expect the central bank to maintain high interest rates until the end of the year and start lowering interest rates from early next year as inflation declines.
foreign exchange reserves
The central bank is managing and increasing foreign exchange reserves in accordance with the International Monetary Fund’s economic reform program to protect the economy from the risk of external shocks.
Foreign exchange reserves increased by approximately US$11 billion in the past six months, reaching a record high of US$46.49 billion at the end of July last year.
According to the organization’s previous forecast, foreign exchange reserves will increase to US$51.4 billion at the end of June 2025, US$63.9 billion in June 2026, and US$77.8 billion in June 2027.
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