Tarek Metwally — former vice president of BLOM Bank Egypt — said that the measures taken by the Central Bank of Egypt (CBE) last Thursday, despite their harshness, are a long-awaited step to put the Egyptian economy on the right track again.
He added that the measures that have taken place over the past months since the beginning of the war in Ukraine have only been painkillers, which makes the CBE’s current measures essential.
Metwally also pointed out that economic reform and attracting foreign investments could not continue in light of an irregular exchange market, two currency rates, and transactions that take place mostly through the parallel market, adding that this decision provides a way to meet demand to create a stable exchange market.
He explained that it is common knowledge that in trade, payments are either made immediately or later. This makes it essential to have flexible mechanisms that accommodate changes.
“I believe the decision to gradually eliminate decisions related to import by the end of this December, while increasing the value of the goods exempted from documentary credits to $500,000 instead of $5,000, will have the greatest impact in making some goods available in markets gradually and reducing their prices,” he said.
Furthermore, he pointed out that with the shortage of supply as a result of previous decisions regarding import, the pricing of products has become random and exaggerated, which led to large increases in the prices of goods and products due to the uncertainty of the situation. Moreover, he expects a decline in prices after the market stabilises and goods become available again.
Additionally, he noted that eliminating the parallel market and stabilising the exchange market in the coming period is a target, along with introducing a new savings vessel at an interest rate of 17.25% for a period of three years. Saving vessels of at least 20% interest rate can also attract savings and entice customers to abandon the dollar and eliminate dollarisation.
“This is the bitter medicine that we must all take, with no alternative. However, I’m confident in those managing the situation in the CBE. The government now has a major role to play, and it’s to attract direct foreign investments as better infrastructure becomes available,” he said.
“Citizens have been through a lot, but we still have hope to create opportunities and give a good performance through human resources and sovereign decisions.”