Is the Egyptian economy improving despite interest rate fixing?

Egyptian economist Hanan Ramses commented on the rise in the currency at the Egyptian Central Bank after it resorted to fixing interest rates despite inflation rising to its highest level since 2017.

Ramses explained that “fixing the interest rate broke the cycle of inflation because raising it would lead to further growth, hoping for higher transaction rates, lower financing costs, and providing a competitive advantage to the product without fear of a high price of raw materials. materials involved in production.

And she continued: “In addition, fixing the interest rate gradually leads to a reduction in domestic and external debt.
Since the state is the largest borrower of the banking system, and a 1% increase in the interest rate is costing the state’s general budget a deficit estimated at £60 billion with each increase.

Ramses pointed out that “fixing interest rates proves the cost of external debt, but rather aims at its gradual reduction, and the adoption of the decision to fix contributed to the increase in government revenue from tourism and direct investment income, and also proposed investment initiatives. and a gold investor license that has facilitated foreign cash flows for investment, but it remains for Egypt Increasing export earnings, returning to full production and accepting other currencies for trade exchange to reduce dollar transactions, so the exchange rate is stabilizing in preparation for a decline dollar prices and preparing for a recovery in the pound sterling, which eases the burden on the Egyptian economy and prepares to achieve the desired economic development.

Notably, a number of Arab countries have raised interest rates as the Central Bank of Saudi Arabia, the Central Bank of Bahrain and the Central Bank of the Emirates raised interest rates following the U.S. Federal Reserve’s eighth consecutive rate hike since March 2022.

Source: RT

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