According to a representative of the International Monetary Fund, Egypt’s decision to hike interest rates is a positive step, and the use of a flexible exchange rate would help shield Egypt’s economy from shocks at a time when the global financial environment is unstable.
In addition to an employee agreement to assist the funding of the International Monetary Fund in the amount of $3 billion, the Egyptian government promised to establish the “permanently flexible” currency rate. The central bank also increased interest rates by 200 basis points.
Jihad Aqour, Director of the Middle East and Central Asia Department of the International Monetary Fund, told Reuters that the central bank’s actions to raise interest rates last week were “a step in the right direction” and that it was crucial to keep inflation under control.
Moving to a flexible exchange rate, he continued, will aid Egypt’s economy in protecting itself from external shocks as well as shocks caused by the gap between import and export rates, particularly at a time when the world’s financial conditions are becoming more and more severe.
A good action. The International Monetary Fund supports the decision to raise the interest rate in Egypt
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