The International Monetary Fund (IMF) has placed the monetary policies adopted by the central banks of US and Europe as top risks facing the Egyptian economy during the coming period, knowing that these policies would contribute to the re-balance of the dollar and Euro against the Egyptian pound.
The United States and Europe started after the world financial crisis to apply exceptional monetary policies that aim at keeping the interest rates low and interfering fiercely in the bond market to rescue the economy from recession.
As the signs of economic re-balance started to show, these two economic entities started to withdraw gradually from the monetary policies. Commenting on these policies, the IMF said that in case any unexpected transformations took place in the world financial condition, this would weaken the market's attraction towards Egyptian pound bonds.
Egypt depends on Euro bonds as one of the major sources to fill the gap of foreign currency resources amidst a fragility shown by the tourism sector in light of the security crises and the failure of foreign investments to reach the targeted average determined by the government. Egypt sold international bonds worth USD1.5 million in June 2015, for the first time since the January revolution in 2011. Further, it signed a loan deal in November under the framework of foreign funding.
IMF warned from risks of the rise in oil prices, which would weaken the balance of the current account, increase the subsidy of fuels and affect negatively the public debt. On the local level, the fund warned from the slump of economic reforms whether due to exhaustion from reform procedures, the resistance from business owners or the authorities concerns regarding social tensions.
It also warned from unannounced interventions in the currency exchange market in order to control the currency value.