The Central Bank of Egypt (CBE) has managed to achieve strong foreign exchange (FX) reserves before the novel coronavirus (COVID-19) pandemic and apply wide structural reforms which accordingly have strengthened the country against external shocks, according to CBE Deputy Governor Rami Aboul Naga.
Aboul Naga’s comments came during the opening session of the Payment, FinTech, and Digital Inclusion Forum and Exhibition (Pafix) on Monday.
He also said that the CBE has accumulated experience over the years in managing crises, which helped it quickly deal with the repercussions of the pandemic. This ensured that the Egyptian economy will continue to grow, by a projected 3.6%, in fiscal year (FY) 2020/21. The country’s growth will be driven by macroeconomic stability and a narrowing budget deficit against a primary surplus of 1.8%, recording a positive reading for the third consecutive year.
He added that the CBE has succeeded in reducing inflation from its highest levels, which exceeded 30% in 2017, with the annual rate of inflation reaching 4.5% last October.
Aboul Naga noted that Egypt’s strong FX reserves have been reflected in investors’ appetite for the country’s international bonds worth $5bn in May 2020, and green bonds worth $750m.
He added that the strong infrastructure for payment systems and services in Egypt has also helped the country respond to the crisis quickly and effectively. This comes within the CBE’s vision to transform the country into a more cashless society, and less dependent on handling banknotes.
He noted the CBE’s keenness to establish the regulatory laboratory for innovative financial technology applications, the Regulatory Sandbox. The initiative plays an important role in encouraging the launch of these applications in the Egyptian market, taking into account the requirements of maintaining the integrity and stability of the financial system.
He also said that, in parallel with these efforts, the CBE has launched several initiatives to achieve financial inclusion and digital transformation.
“We encouraged banks to pump more funds with subsidised interest rates for medium, small and micro enterprises, which resulted in a growth in the size of banks’ portfolios directed to these projects worth EGP 213bn for over 1.081 million beneficiaries from December 2015 to September 2020,” Aboul Naga said, “This was in addition to the launch of the “Nile Pioneers” initiative, to provide a comprehensive and effective infrastructure to support entrepreneurs and small projects.”
He added that the CBE has also launched several initiatives to support the Egyptian economy, including the initiative covering industrial, agricultural, and contracting for large companies. This has been set up to support the country’s tourism sector and its workers, and other real estate financing for low and middle income groups.
Moreover, digital payment services have played a large and effective role in implementing the state’s plan to deal with the potential repercussions of the coronavirus, and limit the virus’ spread. This was evident through the precautionary measures and measures issued by the CBE.
He said that the CBE is currently coordinating to prepare a national strategy for financial inclusion. Coordination is currently underway between the concerned authorities to set clear goals and a vision for the strategy, including agreement on the main indicators of financial inclusion and setting priorities.