Egypt’s Ismail Says Central Bank to Fix Currency Crisis Soonby
Prime minister says past currency moves had negative results
Government also studying ‘progressive taxation,’ Ismail says
The central bank will unify the Egyptian pound’s official and black market exchange rates as soon as possible, Prime Minister Sherif Ismail said, boosting expectations that policy markers will devalue the currency ahead of an expected International Monetary Fund loan.
The regulator is studying the problem and will act in the right time, the state-run MENA news agency cited Ismail as telling parliament on Monday. Past exchange-rate moves were done without the right tools and with negative results, Ismail said, without elaborating.
Egypt’s economy has been suffering from a shortage of hard currency that officials have said a $12 billion loan from the IMF would help solve. The Egyptian pound lost almost 40 percent of its value in October on the black market, where it trades at more than double the official rate of 8.88 pounds per dollar. Officials devalued the pound in March in an attempt to put black market traders out of business and to attract overseas investment.
In addition to currency measures, investors expect the government to cut fuel subsidies ahead of the IMF deal, as it tries to close a budget gap that reached 12.2 percent of gross domestic product last fiscal year. Egypt also began implementing value-added taxation last month, and Ismail said on Monday the government is studying "progressive taxation," without giving details.