File- President Abdel Fattah El Sisi gives a televised speech on Labor Day on May 1, 2021- press photo
CAIRO – 21 March 2022: President Abdel Fattah El-Sisi approved a 13-percent increase in pensions, said Egyptian Prime Minister Moustafa Madbouli in a press conference on Monday, adding that the increase would be applied next April rather than July, at an additional cost of LE 8 billion.
The conference was held after a number of decisions taken by the Central Bank of Egypt regarding the rates of interest and exchange to mitigate the global economic repercussions of the ongoing Ukraine-Russia military escalation.
The Prime Minister said that the government fixed the customs exchange rate at LE 16 per US dollar until the end of April, and the cabinet meeting on Tuesday would announce a stimulus package to the Egyptian Stock Exchange during the cabinet meeting.
“A total of 450,000 new families were added to the ‘Takaful and Karama’ pension, at an additional annual cost of LE 2.4 billion,” he said, noting that citizens whose annual income is less than LE 30,000 would be exempted from taxes.
During the conference, Governor of the Central Bank of Egypt (CBE) Tarek Amer defended the bank’s decisions that have been adopted by the bank regarding the devaluation of the Egyptian pound against the US dollar by 16.67%.
“The Central Bank’s decisions regarding, interest and exchange rates are very good and strong. The decisions aim at preserving Egypt’s financial capabilities and maintaining the liquidity of the foreign exchange,” said Amer in a press conference on Monday.
The importance of interest rates boils down to providing liquidity; without liquidity, the prices would be very different, he added, noting that the Egyptian banks have sufficient liquidity and finance development projects.
International reactions to CBE decisions regarding the exchange and interest rates are positive, he said, adding “due to our strong financial reserves, we were able to repay all our international obligations on time.”
The Russian-Ukrainian war was another blow that led to global economic instability and major economic wars, and of course, it affected Egypt, Amer continued.
“We became part of the international market, so it was necessary to take measures regarding the monetary policy to maintain confidence in foreign investment in Egypt and confidence in the international market,” the governor said.
“We controlled the inflation rates over the past 7 years as they recorded 3.5 and 4%. Also, interest rates have not been raised since 2017, besides we provided subsidized interest rates for the industry, tourism and contracting sectors,” he added.
Inflation in Egypt was caused by abroad factors and is not a result of anything in the internal policies, the governor said.
Some Egyptian banks offered deposit certificates with an 18 percent annual yield.
The exchange rate of the US dollar against the Egyptian pound in the National Bank of Egypt and Banque Misr jumped to LE 17.4 for purchase and LE 17.5 for sale on Monday morning. The US dollar exchange rate rose from LE 15.6 for purchase and LE 15.75 for sale.
The move in the dollar exchange rate against the pound comes after the Monetary Policy Committee of the Central Bank of Egypt announced, in an extraordinary meeting on Monday, to raise the interest rate by 100 basis points.
The Central Bank of Egypt’s (CBE) overnight deposit rate, overnight lending rate, and the rate of the main operation were raised to 9.25 percent, 10.25 percent, and 9.75 percent, respectively. The discount rate was also raised by 100 bps to 9.75 percent.
However, few hours later, the US dollar against the Egyptian pound roses again to 18.22 for sale.