El-Erian Says Currency Valuation Not Cause of Egypt's Problems

Egypt’s officials should put less focus on the valuation of the local currency as they try to solve the country’s economic problems, Mohamed El-Erian, the former chief executive officer at Pacific Investment Management Co., told reporters in Abu Dhabi on Thursday.

“Egypt does not produce enough, needs continuous electricity, reform of the tax system and pro-growth measures to reduce the deficit," said El-Erian, a member of a recently-revived council which coordinates policies between Egypt’s government and the central bank. The pound’s valuation is neither the main problem nor the main solution, he said.

Egypt has been facing a foreign currency shortage that’s weighed on the nascent economic recovery. Authorities have introduced measures to reduce imports, raised interest rates and put capital controls in place to save hard currency, though that didn’t prevent the pound from weakening to a record of 9.33 per dollar on the black market earlier this week.

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