Global Courant 2023-05-18 13:23:12
The Monetary Policy Committee of the Central Bank of Egypt (CBE) will meet on Thursday to determine whether to further raise interest rates in Egypt.
Economist Ahmed Shawky told Al-Masry Al-Youm that he expects the CBE to set interest rates in Egypt, in an effort to lower medium- and short-term inflation, based on several indicators — the first of which is related to inflation starts to decrease relatively.
Another reason for the CBE to set interest rates is that raising rates would increase the borrowing burden for businesses and institutions at a time when the government is pursuing a strategy of rapid growth, he added.
Raising interest rates impacts the state’s general budget and increases foreign debt, which the government aims to reduce to 75 percent of GDP over the next few years, Shawky said.
Economic researcher Yassin Ahmed previously explained that every one percent increase in interest rates causes the state’s general budget to carry an additional debt burden of about LE32 billion, leading to an increase in the cost of interest in the state’s general budget, and thus affects the debt and budget deficit.
Ahmed told Al-Masry Al-Youm that raising interest rates will not pay off as raising interest rates has not had the desired results in the past nor reduced inflation.
Edited translation of Al-Masry Al-Youm
