CBE’s Governor Hisham Ramez– Photo by Amwal ElGhad
In an interview with online news portal AlYoum AlSabee’, Ramez let off some steam about recent rumors and statements circulating in the media this week – an act that can be viewed as a power struggle between the independence of the Central Bank of Egypt (CBE) and the members of the party in power.
The governor of the CBE stated that the International Monetary Fund (IMF) could not control the CBE or determine the exchange rate of the Egyptian Pound, even if the country receives the $4.8 billion loan.
This comes in response to businessman Hassan Malek’s statements. Malek is a member of the Muslim Brotherhood (MB) and probably their most successful businessman – a point that is often used against him, as he is sometimes described as the “business-arm of the MB”.
Businessman Hassan Malek– Photo by Amwal ElGhad
He announced that the recent drop of Egypt’s currency rate has two main triggers: First of all, the need to “refresh” the economy, and second of all, to live up to the conditions set by the IMF. He also foresees an additional drop very soon and added a few other statements about how the government is trying to fix the budget-deficit and assure financial stability.
Ramez described these statements as “untrue”, and accused them of having a negative impact on the market. He also assured that the only entity allowed to give official statements about the political economy of Egypt and its currency rate, is in fact the CBE.
“The CBE is working on maintaining the currency rate of the Egyptian Pound, which of course changes with the mechanisms of supply and demand for the American Dollar,” he added. Ramez also explained that the government is the one who is setting an agenda for economic reforms, which will be proposed to the IMF, determining whether Egypt will receive the loan or not.
On the other hand, Malek stated that the government had already started in increasing tax rates, fuel and gas prices and hinted that harsher changes will occur after the Parliamentary elections in April.
Several experts claim that the MB wants to secure its victory in the elections, by “going easy on the people” before, and applying major financial changes and burdens after. At the same time, it does not want to jeopardize the loan, and word has it that for instance the removal of subsidies is one of the main requirements for convincing the IMF of Egypt’s “worthiness” of getting the $4.8 billion.
“The CBE will not allow any interference in its matters, either from national authorities or any other entity. We aim at stabilizing the currency rate and the Egyptian market, and want to keep a low rate of inflation,” Ramez concluded.