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Egyptians sacrifice savings to cope with rising prices, expert says

Central Bank of Egypt [File photo]
Central Bank of Egypt [File photo]

The monthly report of the Egyptian Central Bank showed the largest drop of saving rates in 15 years, noting it retreated by 5.8 per cent compared to GDP during 2015-2016, Rassd reported yesterday.

Economic expert Fakhri Al-Fiqi said that the retreat in the saving rate indicates the exhaustion of Egyptian’s purchasing power and the financial positon of citizens, noting that the last three months witnessed a retreat of deposits by more than 15 per cent.

He stressed that this retreat negatively affected the liquidity of cash flow and lead to increasing rates of inflation. “All facts indicate the retreat of the state’s development,” the expert told Rassd, noting that this would lead to increasing budget deficit.

Read: Inflation hits highest level in over a decade in Egypt

The expert also said that an International Monetary Fund (IMF) loan to Egypt “will not have any benefit” due to the continuous deterioration of development rates compared to increasing inflation and prices in the markets.

Al-Fiqi also expected that the Egyptian market would remain unstable during this month and at the beginning of the next month until the start of implementing new measures related to decreasing support of basic commodities and modifying tax law ahead of receiving the second payment of the IMF loan.

To help solve the problem, the expert said that broad foreign investment is needed in Egypt in order to afford work opportunities and this would eventually lead to increasing saving rates.

Watch ‘Sisi wants change’: President asks Egyptians to donate loose change to the government

Savings deposits recorded a retreat of 16.99 per cent at the end of October last year. The government recently announced that the inflation rate increased in January by 29.6 per cent, compared to 24.3 per cent at the end of 2016.

The negative influence of floating the Egyptian pound has been affecting all economic sectors since it started in November last year.

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