Economic analysts, professors, CEOs and consultancies gathered on Monday in a workshop to discuss monetary policy and foreign exchange, organised by PwC and N Gage Consulting.
Economy professor at Cairo University Alia El-Mahdy explained that the CBE has increased printing local currency from EGP 10bn before 2010 to EGP 57bn per year following the 25 January Revolution in 2011.
According to El-Mahdy, high interest rates are decreasing the competitive ability of local manufacturers who export, as well as the investment appetite of the private sector.
El-Mahdy requested that banks increase their focus on the private sector, highlighting that 10 years ago, more than 50% of bank investments were directed to loans and investments and 20% were directed for government bonds; however, currently government’s bonds value at 44% and the loans and investments take 32% of the share.
She added that the currency exchange rate should be used to achieve economic growth, noting that the value of the Egyptian pound is not a “national pride” toll.
Chairman of Cairo Cotton Centre Magdy Tolba, meanwhile, called for increasing the availability of foreign currency through supporting industrial and tourism sectors.
There should also be an amendment to the market exit law, as it currently puts pressures on insolvent factories and investors, Tolba said.
“Egypt can easily double its export revenues to $40bn, if factories operate at full capacity, instead of operating at 50% of capacity,” Tolba said.
Tolba called on the new CBE governor to meet with the industrial sector to resolve the issue of insolvent factories, which he said amounts to 8,000 factories.
The answer to the industrial sector is to increase production in order for the factories to be able to register profits and repay bank loans, he said.
Meanwehile, Ahmed Ozalp, partner at Akanar Partners, expects an improvement on the FDI level, thanks to a boom in mergers and acquisitions (M&As) in Egypt over the past year.
According to Ozalp, foreign investors study the market well before entering. He called for more focus on the needed procedures. “We have a growth potential, we only need the reform,” Ozalp said.
The conference called on a “true” community dialogue to discuss the recent laws “that have been issued with a real dialogue with stakeholders”.
N Gage Consulting and PricewaterhouseCoopers (PwC) organised an open discussion that involves public and private sectors, to explore the impact of the possible changes in monetary policy within Egypt on trade, investment, and the budget deficit.
As mentioned in the conference, there are major challenges currently facing the Central Bank of Egypt (CBE), including rebuilding foreign currency reserves, regulating the exchange market and creating balance in domestic interest rates.
The CBE is also challenged with controlling inflation, covering the budget deficit, improving banking regulations and assisting banks in the employment of their accumulated liquidity.