The governor of Egypt’s central bank has resigned as the nation struggles to curb inflation triggered by Russia’s war in Ukraine, high oil prices and a drop in tourism.
Reacting to the development in a statement, President Abdel Fattah el-Sissi accepted the resignation of Tarek Amer and named him a presidential adviser.
However, the statement did not give explanation for Amer’s resignation.
Also, no replacement was immediately named for Amer, who had been appointed governor of the central bank in November 2015.
Amer has been under fire for his handling of Egypt’s financial challenges.
Local reports have it that the currency is under pressure, sliding in value to more than 19 Egyptian pounds to the dollar. That followed a central bank decision allowing the currency to depreciate by around 16% in March to try to stem a growing trade deficit.
Harping on the development, Jason Tuvey, a senior emerging markets economist at Capital Economics said “It seems there’s a lot of tensions within policymaking circles, and I think that’s ultimately what led to Mr. Amer’s resignation”.
The expert said there are officials that oppose devaluing the pound and instead support measures like rationing gas consumption by curbing electricity usage, which could in turn harm business activity.
Reports said Amer is believed to be seen as in the camp that supported the pound’s depreciation as a way to secure a loan from the International Monetary Fund.
Remarkably, the London-based Capital Economics research firm predicts that Egypt’s currency will continue to slide, reaching 25 pounds to the dollar by the end of 2024 amid sustained pressure.
Meanwhile, Amer’s resignation came after key ministries were recently reshuffled as the government faces mounting pressure from economic challenges. The Cabinet shake-up, which was approved by parliament in an emergency session, affected 13 ministries, including health, education, culture, local development and irrigation.
Reports have it that Russia’s war has been deeply felt in other ways in Egypt, the world’s largest wheat importer that sources around 80% of it from the Black Sea region.
Records have it that in the first weeks after the invasion of Ukraine in late February, the price of wheat and other grains skyrocketed, as did the price of fuel. Although prices have come down somewhat, the cost of grains remains at least 50% higher than before the pandemic in early 2020. Also, the cost of shipping to export those grains through the Black Sea is high.
The nation’s inflation reached 14.6% in July, increasing pressure on lower-income households and everyday necessities.
According to government figures, a third of Egyptians live in poverty.
