Egypt bank concerned as inflation rises again

The Central Bank of Egypt (CBE) has said that there are domestic and foreign risks that threaten the outlook for inflation in the country.

According to a CBE statement issued yesterday, these risks are “timing and magnitude of possible actions to reform the subsidy scheme”.

The Egyptian government is preparing to significantly reduce the subsidy scheme as part of the requirements of the International Monetary Fund (IMF). Oil subsidies are expected to be cut by 26 per cent; electricity subsidies by 47 per cent, while the prices of train and subway tickets are projected to rise, which may consequently raise the prices of food commodities.

The external risks that would affect the inflation rates are the rise in crude oil prices and the tightening of global monetary conditions; raising interest rates against the dollar.

Inflation soared in Egypt following Cairo’s decision to float its currency and abandon its peg to the US dollar in late 2016 as part of a $12 billion International Monetary Fund loan to boost the economy.

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