Egypt’s central bank kept its key interest rates unchanged on Thursday, citing a slowdown in economic growth and a moderation in inflation.
The Monetary Policy Committee (MPC) decided to maintain the deposit rate at 19.25% and the lending rate at 20.25%, in line with the expectations of most analysts.
The MPC said in a statement that real gross domestic product (GDP) growth declined to 2.9% year-on-year in the second quarter of 2023, from 3.9% in the previous quarter, reflecting the impact of the political unrest that followed the presidential election in December.
The statement added that inflation decelerated to 34.6% in November, from a record high of 38% in September, mainly due to lower food prices and base effects.
However, the MPC warned that the global economic outlook remains uncertain and challenging, as several countries face new waves of social and political instability, as well as supply chain disruptions and energy shortages.
According to a report by Reuters, the MPC said it will continue to monitor all economic developments and will not hesitate to adjust its stance to achieve its mandate of price stability and support the economic recovery.
The central bank’s decision came as Egypt faced a series of challenges, including a soaring public debt, a widening budget deficit, a weakening currency, and a fragile security situation.
Egypt has been relying on a $12 billion loan from the International Monetary Fund (IMF) since 2016, which required the country to implement a series of reforms, such as cutting subsidies, raising taxes, and floating the pound.
The IMF praised Egypt’s economic performance in its latest review in October but urged the authorities to maintain fiscal discipline, enhance social protection, and improve governance and transparency.
Egypt’s President Abdel Fattah al-Sisi, who won a third term in a controversial election last month, has vowed to continue the reform agenda and to boost investment and job creation.
He also pledged to improve the living standards of the poor and the middle class, who have borne the brunt of the austerity measures and the high inflation.
Egypt, the most populous Arab country, has a young and growing population of about 100 million people, of whom more than a third live below the poverty line.
The country also faces environmental and water challenges, as it depends on the Nile River for most of its freshwater needs, which is threatened by a dispute with Ethiopia over a giant dam project.
Despite the difficulties, Egypt has also shown signs of resilience and potential, as it has diversified its energy sources, expanded its infrastructure, and attracted foreign investment in various sectors, such as tourism, agriculture, and technology.
Egypt’s central bank said it expects the economy to gradually recover in the coming fiscal year, which starts in July and to achieve a growth rate of 5.5%, supported by domestic and external demand, as well as the implementation of structural reforms.
