The chairman of the Egyptian Businessmen’s Association, Ali Eisa, said that Egypt’s new interest rates cuts are a logical response to the variables that the domestic and global market are seeing.

All business executives were calling for a rate cut, he said in an exclusive interview with Ahram Online, as interest rates had begun to rise in the wake of the implementation of Egypt’s economic reform program in late 2016, and the business market’s performance has slowed.

“The biggest beneficiary of taking this action is the public treasury. Every cut of 1 percent is saving about EGP 60 billion per year in favour of public treasury, as the government is the biggest borrower from the banking system in the market. Moreover, decreasing interest rates will decrease the budget deficit, thus saving more allocations for education, healthcare and services,” Eisa said.

The Central Bank of Egypt (CBE) had pushed the interest rates up by 700 bps, or 7 percent, since 2016, with the implementation of the economic reform program, according to Eisa, and has decreased rates twice.

But the market really needs these rates to be as they were before the floating of the Egyptian pound when they were at 9 percent to counterbalance the inflation rate, which dropped recently to 8.7 percent.

“If the CBE will not cut interest rates to this extent, 2 percent difference between the two rates is reasonable for the market to escalate financial, industrial, and venture performance,” he said.

He also said that the CBE is doing its part for more flexible financial procedures towards an easy-cycle economy, but attracting investments and boosting production need more. It needs to eliminate state bureaucracy and adopt easier policies for investors and business executives, he said.

“The legislative arsenal that controls investment and doing business is good… but, on the ground, the investor is challenged by many obstacles that should be dealt with,” Eisa said.