File Photo: General Coordinator of the National Dialogue Diaa Rashwan. Al-Ahram
Hussein Eissa, a professor of public finance, said that "the budget deficit in Egypt is largely to blame for excessive foreign borrowing."
"To reduce foreign borrowing, we must rationalize public spending and generate sovereign sources of income, instead of resorting to foreign loans," advised Eissa.
Fakhri El-Fiqi, head of the parliament's budget committee, called for accelerating the privatization program to help narrow the foreign exchange gap, which is significantly responsible for the recent inflation of the Egyptian pound.
The causes of inflation
"High inflation in Egypt is the result of a mix of factors: the rising cost of imports, the war in Europe, the crunch in FX revenues, and fiscal policies," said Mohamed Soliman, head of the parliament's economic committee, noting that "the government has taken several measures to curb inflation, but these have not yet born fruit."
Mohamed Khalil, a member of the Free Egyptians Party, dismissed official reports that the war in Ukraine is mainly to blame for Egypt's inflation rate.
"In most countries around us and even in Europe, inflation rates are ranging between five and ten per cent, while inflation in Egypt has soared to more than 40 per cent," said Khalil.
He insisted that "government fiscal policies, particularly excessive foreign borrowing, are largely to blame for the country's high inflation rates."
Gouda Abdel-Khaleq, a former cabinet minister, agreed with Khalil, noting that Egypt's inflation can mostly be ascribed to internal factors, in addition to "the proliferation of monopolies and the lack of tight government control on the retail market."
Deputy finance minister, Ahmed Kouchouk, responded that Egyptians "should differentiate between foreign debts in general and foreign debts taken on by state authorities. Egypt's general foreign debts now stand at $165 billion, while those of state authorities do not exceed $82 billion."
"As for the budget deficit, it also narrowed from more than 15 per cent in 2014 to 6 per cent in the fiscal year 2022/23," said Kouchouk.
Ahmed Galal, head of the National Dialogue's economic committee, said that "inflation is now Egypt's number one problem" because it impacts all citizens and threatens their incomes.
Galal argued that "a fixed exchange rate is just a temporary solution; it is not enough to curb inflation."
Instead, "there should be a flexible exchange rate that can control inflation while at the same time, the government should adopt strategies to fight monopolies and strike greedy traders with an iron fist," urged Galal.