MP Mohammad Badawi Desouki File Photo
CAIRO – 24 May 2017: The Central Bank of Egypt’s unpredicted decision to increase the deposit and lending rates by 200 basis points will increase the public debt interest by LE 40 billion, said parliamentarian Mohammed Badawi Desouki in a Wednesday statement.
Desouki added that this decision has many negative effects on the Egyptian economy. He pointed out that raising the interest rate will encourage savings and reduce citizens’ consumption, which will reduce investments in the future.
He also pointed out that the inflation is a result of the US dollar surge. In addition, the increase in the production cost of goods led to higher prices, so the government should have considered the means to increase production instead of increasing interest.
On May 21, the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) decided to increase the deposit and lending rates by 200 basis points from 14.75 percent to 16.75 percent, and from 15.75 percent to 17.75 percent, respectively.
This decision meets the International Monetary Fund’s (IMF) demands to hike the interest rates in order to tame the rising inflation.