The Central Bank of Egypt took a significant decision on Wednesday to allow the Egyptian pound’s exchange rate to be determined by market mechanisms. This move is part of the bank’s ongoing monetary policy adjustments aimed at accelerating the reduction of inflation rates.
In a statement, the Central Bank highlighted its commitment to monetary restraint and announced its intention to expedite the process to achieve a downward trajectory in inflation. By transitioning to market-based exchange rate mechanisms, the bank aims to foster greater stability and efficiency in currency valuation, reports Al-Qabas daily.
Egyptian Prime Minister Mostafa Madbouly also announced the signing of a financing agreement with the International Monetary Fund (IMF). The comprehensive agreement includes a financing package totaling $20 billion, with $8 billion allocated from the IMF and $12 billion from the World Bank and the European Union.
In tandem with these measures, the Central Bank of Egypt implemented a series of interest rate adjustments. Deposit and lending interest rates, as well as the main operation rate, were raised by 600 basis points to 27.25%, 28.25%, and 27.75% respectively. Additionally, credit and discount rates were increased to reach 27.75%.
These initiatives underscore Egypt’s commitment to fiscal discipline and economic stability, aimed at mitigating inflationary pressures and promoting sustainable growth. The government’s collaboration with international financial institutions reflects a concerted effort to secure vital financial support and reinforce confidence in Egypt’s economic trajectory.
