The Central Bank of Egypt (CBE) rejected a request from the parliament’s Industry Committee to allocate 20-25% of the monthly surplus to factories for the procurement of raw materials.
Parliamentary sources said that the committee’s request was rejected due to the CBE’s policy of increasing foreign currency reserves.
The sources told Daily News Egypt that instructions from parliamentary Ali Abdul Aal to not discuss monetary policy came after members of parliament criticised the CBE Governor Tarek Amer on the back of the price of the US dollar increasing to EGP 10.5 on the informal market.
Daily News Egypt had revealed that the Industry Committee sought Deputy Governor of the CBE Gamal Negm to provide US dollars for factories by allocating 20-25% of the monthly surplus to buy raw materials. However, Negm advised them to find the necessary funds in the parallel market.
Foreign cash reserves at the CBE rose to $17.52bn last month, an increase of $510m from April.
The sources said that the CBE’s rejection to secure dollars for factories will exacerbate the rising exchange rate of the US dollar against the pound on the parallel market.
They added that the decline in the US dollar exchange rate to EGP 10.9 earlier this week is temporary and will continue to rise unless stabilised.
They pointed out that the price of the US dollar on the parallel market is too high for factories to import raw materials, which will affect production cycle and profits of non-oil exports.
Meanwhile, Minister of Investment Dalia Khurshid pledged to present the ministry’s work programme to the parliament as a quarterly report.
Member of the parliamentary Economic Affairs Committee Medhat El-Sherif told Daily News Egypt that Khurshid will send the investment map to parliament before sending it to investors for consultation.
He said that Khurshid presented proposals for amending the investment Law No.17 for 2015, noting that there are some restraints on the proposals, promoting the projects is one of them.
Egypt ranked 131st out of 189 countries that are attractive for investment, compared to being ranked 106th in 2010.
Khurshid said that Egypt targets to rank 60th by 2020 and 30th in 2030.