PM Mostafa Madbouly and CBE governor Tarek Amar in their press conference on Monday (Photo : Egyptian cabinet)
In a joint press conference in Cairo with Central Bank of Egypt (CBE) governor Tarek Amer to discuss the decision to raise the key interest rates earlier on Monday, as well as the decisions to support citizens during the price hike crisis, PM Madbouly said that it is not yet clear when the crisis will end.
On Monday, the Egyptian pound plunged to its lowest value in nearly five years against the US dollar, trading at EGP 18.1 for buying and EGP 18.2 for selling, down from EGP 15.6 and EGP 15.7 respectively the night before, according to the CBE.
“The current crisis is harder than the coronavirus crisis,” the Egyptian prime minister said, recounting how the Egyptian government managed to overcome the impact of the coronavirus, achieving growth as well as international recognition.
According to Madbouly, the Russia-Ukraine crisis has placed inflationary pressures on the whole world, especially on fuel and food prices.
He also said the main priority for the government is to provide main commodities to citizens, highlighting the decisions and incentives announced recently to support local farmers to increase wheat production.
CBE Governor Amer said the decisions that were taken earlier are meant to save Egypt’s financial resources and the liquidity of foreign currencies in the country.
“This is the first time we change the key interest rate since 2017,” Amar said, adding that in the past year the inflation level was controllable, unlike during the current crisis.
The CBE raised key interest rates by 1 percent (100 basic points) during an unscheduled meeting of the Monetary Policy Committee earlier on Monday.
During the presser, the governor of the Central Bank also asserted that the current crisis is harder than the coronavirus crisis, which the Egyptian government navigated successfully, unlike other countries.
Amer also said the current inflation witnessed in Egypt was imported from abroad, but that despite the current crisis, Egypt still has high liquidity.
Amer also indicated that the state-owned National Bank of Egypt and Banque Misr launched on Monday two saving certificates with an 18 percent interest rate to help people increase their savings during the crisis.
To help contain the inflation wave, the Ministry of Finance has announced a package of financial and social protection procedures worth 130 billion to address the ongoing global economic crisis.
The procedures include an allocation of EGP 2.7 billion to include 450,000 new families in the Takafol and Karama social protection programme, in addition to allocating EGP 190.5 billion to disburse the annual increase in pensions with a minimum of EGP 120 per pensioner as of 1 April.
The income tax exemption limit has been increased by 25 percent from EGP 24,000 to 30,000 per individual.
Public servants will receive their yearly raise – usually disbursed within July's payroll – in April with an increase ranging from 8 to 15 percent with a minimum of an EGP 100 ceiling and without a maximum limit.