Minister of Planning Ashraf El-Araby ruled out that the value of the US dollar could be specified after the liberalisation of the exchange rate.
“No one can say for certain at what value the Egyptian pound will stabilise against the US dollar after the flotation,” El-Araby said
El-Araby said in an educational seminar on the sidelines of the Cairo International Book Fair that the value of the dollar is specified according to the supply and demand of foreign currency.
He pointed out that the economy depended on consumption and the increase of the value of imports without obtaining investments for 30 years.
El-Araby said that the reflection of the liberalisation of the exchange rate on the current price hikes is normal. He added that the value of the dollar will not stabilise at the current price against the pound, but it will fall to more reasonable levels.
The US dollar exchange rate at banks registered more than EGP 18.
El-Araby noted that current prices will encourage the export of goods and services to increase.
He pointed out that inbound tourism to the Egyptian market has become cheap and almost free, while religious and foreign tourism is high; therefore, the demand on the foreign currency is expected to decline.
He explained that the first quarter of the current fiscal year (FY) saw an increase in exports against imports, and the improvement is expected to continue over the remaining months of the current FY—therefore, the dollar value will decline against the pound.
El-Araby added that the government will continue to provide subsidies once the economic reform programme, which was agreed on with the International Monetary Fund (IMF), ends, adding that the government has no intention to cancel them.
The government signed a loan with the IMF worth $12bn for a three-year period and obtained the first tranche of the loan worth $2.75bn after the IMF executive board approved it in November.
The programme includes the cancellation of the electricity subsidy by the end of FY 2020-2021; however, the subsidies of oil products worth EGP 25m will continue.
El-Araby said that the government plans to cut the subsidies for fuel, but also plans to introduce a subsidy for public transportation. It will also expand cash support to face the impact of economic reforms on low-income classes in society.
He said that providing oil products through smart cards was the start of the trial operation of measuring fuel quantities injected into different storehouses.