Egypt’s central bank governor resigns as economic woes mount

CAIRO
Wednesday’s resignation of Egypt’s central bank governor was due to the Middle East’s largest nation struggling to control inflation caused by Russia’s war with Ukraine, high oil prices, and a decline in tourism.

President Abdel Fattah el-Sissi accepted Tarek’s resignation and designated him a presidential adviser. said in a statement. Amer’s resignation was not explained in this brief statement.

Amer, who was elected governor of the central banks in November 2015 had no replacement. His handling of Egypt’s financial difficulties has been widely criticized.

The currency is currently under pressure and has fallen to 19 Egyptian dollars to the dollar. In March, the central bank allowed the currency to decline by approximately 16 percent to stop a growing trade deficit.

“It seems that there are a lot tensions within policymaking circles and I believe that’s what ultimately led to Mr. Amer’s resignation.” said Jason Tuvey is a senior emerging market economist at Capital Economics.

Tuvey said There are officials who oppose the devaluation of the pound. They support measures such as rationing gas usage and reducing electricity usage. This could harm business activity. Amer was traditionally seen as being in the group that supported the pound depreciating as a way of securing a loan from International Monetary Fund.

Capital Economics, a London-based research company, predicts that Egypt will continue to lose its currency and could reach 25 pounds per dollar by 2024.

After key ministries were reshuffled on Saturday, the resignation of the head of the central bank comes as the government is under increasing pressure due to economic problems. Parliament approved the Cabinet shake-up in an emergency session. It affected 13 ministries including culture, education, and local development. The country’s tourism and antiquities minister was also replaced.

The collapse of the COVID-19 pandemic, years of turmoil and the subsequent war in Ukraine have had a devastating effect on Egypt’s vast tourism industry. Before the conflict, about a third of Egypt’s tourists came from Russia.

Russia’s war is also felt in Egypt, which is the largest importer of wheat in the world and sources about 80% from the Black Sea region.

The price of wheat and other grains shot up in the first weeks following the invasion of Ukraine, which took place in late February. Although prices have fallen slightly, the price of grains is still at least 50% higher than it was before the pandemic of early 2020. The shipping costs to export the grains through the Black Sea are high.

The country of 103million people saw inflation reach 14.6 percent in July. This has increased pressure on low-income households and daily necessities. According to government statistics, about a third Egyptians live in poverty.

The World Bank points out that Egypt’s government had announced an assistance package of 130 billion pounds (more US$8 billion) shortly before devaluing its pound in March to reduce the price rise. The package was intended to improve public-sector salaries and pensions as well as expand cash assistance programs.

The Gulf Arab allies of Egypt have come to Egypt’s aid with multibillion-dollar investments, buoyed in part by high oil prices. This has helped their bottom line.

Saudi Arabia’s sovereign wealth funds, also known as the Public Investment Fund (or the Public Investment Fund), recently created a division for Egypt. This division has announced deals totaling US$1.3billion with the aim to bring in US$10billion into Egypt.

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Batrawy reported in Dubai, United Arab Emirates.