Tarek Amer, Governor of the Central Bank of Egypt – Press Photo
CAIRO - 18 May 2022: Entitled “The Repercussions of the International Crisis and Its Impact on the Economic Conditions in the Arab Region”, the 2022 Arab Banking Conference was launched on Wednesday and will last for two days under the auspices of Tarek Amer, Governor of the Central Bank.
Amer stated that the the policy adopted by the Central Bank of Egypt (CBE) succeeded in reducing the non-performing debt rates in the market to 3.5 percent by the end of December 2021, compared to 45 percent in 2003.
He added during the 2022 Arab Banking Conference that the capital adequacy standard recorded 25.5 percent by the end of December 2021, compared to 14.5 percent in 2017, while the global average for the capital adequacy standard recorded 12 percent.
The governor stressed during the conference, Wednesday, that the central bank’s intervention during the Coronavirus crisis by pumping liquidity from the international reserve and maintaining exchange rates kept the economy from suffering a price crisis.
He noted that international reserves are not sacred, but are built for the benefit of using them in the service of the citizen, pointing out that the support of the political leadership of the Central Bank of Egypt played an important role in declining inflation to 3 percent, until the Russian-Ukrainian war took place.
Moreover, the Egyptian Central Bank will not hesitate to take all necessary measures to curb inflation in the future, according to teh governor.
The Monetary Policy Committee of the CBE is scheduled to hold a regular meeting tomorrow, Thursday, May 19, 2022, to discuss the fate of interest rates, after the US Federal Reserve announced 0.5 percent this month.
The Central Bank had raised the interest rate by 1 percent in an extraordinary meeting in March, and the National Bank of Egypt (NBE) and Banque Misr had issued a savings certificate with a return of 18 percent to counter inflationary pressures.
Following this decision, the exchange rate of the pound against the dollar fell by 17 percent within two days of the decision.
Amer added that banks provided huge financing to the economy during the Corona crisis, and they maintained employment and price levels, and companies' production doubled during 2020 compared to 2019, which made economic growth reach very high levels.
He pledged that investing in the Egyptian pound would be more profitable than other currencies in the medium term, adding that the Central Bank had agreed to the NBE and Banque Misr to issue a savings certificate at 18 percent to support the Egyptian citizen.
“The country had made a simple correction in the exchange rate to avoid the effects of the Russian-Ukrainian crisis, which was reflected in an increase in foreign flows by about 30 percent during last March,” Amer pointed out.
He also noted that the Central Bank used the liquidity of Egyptian banks during the Corona crisis to pay the outstanding obligations and prevent shocks, which enhanced foreign investors’ confidence in Egypt, indicating that these measures succeeded in choosing the Central Bank of Egypt as the top 10 banks in the world.
Amer indicated that the Egyptian banking system includes 38 million bank accounts, stressing: "In every Egyptian home there is an individual who deals with banks."
The CBE’s governor added that the percentage of liquidity in the local currency rose to 45 percent, and in foreign currency it amounted to 67 percent, and the ratio of loans to deposits hit 48 percent, which reflects the state's ability to enhance the financing of its projects.
For his part, Vice-President of the Union of Arab Banks and President of Banque Misr, Mohamed El-Etreby, said that global fluctuations led to high inflation rates, a decline in some countries' foreign exchange resources, disruption of supply chains, and an increase in shipping costs.
El-Etreby called for the need to crystallize a unified Arab position to overcome this crisis, to strengthen structural reforms in Arab countries, and the role of the Arab banking sector to get out of the current crisis with minimal losses.
Sheikh Muhammad Jarrah Al-Sabah, Chairman of the Board of Directors of the Union of Arab Banks, called for strengthening Arab cooperation, encouraging agricultural investment among Arab countries, enhancing their food security and not relying on imports to meet the current challenges.