Cairo – Mubasher: The private sector in Egypt is suffering from higher interest rates and inflation levels, the Financial Times reported.
By the end of the foreign exchange shortage, the Egyptian private sector fell between a sharp rise in inflation and higher interest rates by 700 basis points since the Central Bank of Egypt’s (CBE) decision to liberalise the exchange rate of the Egyptian pound in November 2017.
Although these decisions make Egypt more attractive for some foreign companies, implementing the flotation, coupled with inflation and higher interest rates boosted the operation costs for companies to new levels, as firms are unable to pass the increase in cost to the consumer, the newspaper highlighted.
"We have increased prices on average by 15% because consumers’ purchasing power cannot take more, whereas the increase should have been more like 30%,” Riyada Cheese Factory owner Ibrahim Soudan told the Financial Times.
Chris Jarvis, the IMF mission chief for Egypt, said the interest rate increases were needed to diminish expectations of inflation which he predicts will fall to “between 11% and 13% by the middle of 2018 with continued strong policies”.
Angus Blair, chief operating officer of Pharos Holdings, said it is “imperative for interest rates to go down as quickly as possible,” adding that “without private sector investment, economic growth will remain below par and there won’t be an improvement in employment figures.”
