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Egypt Central Bank Holds Rates Steady After Change of Governor

FILE PHOTO: Central Bank of Egypt's headquarters is seen in downtown Cairo, Egypt February 25, 2021. REUTERS/Mohamed Abd El GhanyREUTERS
FILE PHOTO: Central Bank of Egypt's headquarters is seen in downtown Cairo, Egypt February 25, 2021. REUTERS/Mohamed Abd El GhanyREUTERS
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Egypt Central Bank Holds Rates Steady After Change of Governor

FILE PHOTO: Central Bank of Egypt's headquarters is seen in downtown Cairo, Egypt February 25, 2021. REUTERS/Mohamed Abd El GhanyREUTERS
FILE PHOTO: Central Bank of Egypt's headquarters is seen in downtown Cairo, Egypt February 25, 2021. REUTERS/Mohamed Abd El GhanyREUTERS

The Central Bank of Egypt (CBE) kept its overnight interest rates steady on Thursday, hours after a new governor was named to replace Tarek Amer, who quit on Wednesday.

President Abdel Fattah al-Sisi appointed Hassan Abdalla as caretaker CBE governor on Thursday after Amer's resignation.

Analysts said the CBE may have been conservative after the change of governor, even as Egypt's economy grew faster than expected in the 2021/22 fiscal year and inflation surged.

The CBE's Monetary Policy Committee (MPC) said it left its lending rate unchanged at 12.25% and its deposit rate at 11.25%, Reuters reported.

"The MPC decided that keeping policy rates unchanged remains consistent with achieving price stability over the medium term," it said in a statement accompanying the rates decision.

A Reuters poll of 15 analysts taken prior to Amer's resignation had expected a half a percentage point increase.

"In its decision to maintain policy rates unchanged today, the MPC takes note of its policy rate hikes in its previous meetings," the MPC added.

The central bank raised rates by 2 percentage points in May and 1 percentage point in March to combat inflation after Russia's invasion of Ukraine and US interest rate hikes.

"The committee likely wants to proceed cautiously during the transition period," said Sara Saada of CI Capital.

Egypt's gross domestic product grew by 6.2% in the fiscal year that ended on June 30, up from 3.3% a year earlier.

This was mainly driven by the private sector, particularly non-petroleum manufacturing, tourism, and trade, the MPC said, citing data from the first nine months of the fiscal year.

Inflation rose to 13.6% in July from 13.2% in June, its fastest since in March 2019.

At its last meeting on June 23, the MPC said that for the next six months it would tolerate elevated inflation, caused mainly by the Ukraine crisis, as the economy grows more slowly than expected.

"We expect no changes in the policy rates until the new CBE leadership settles in and takes stock of the situation," said Allen Sandeep of Naeem Brokerage.

Esraa Ahmed of Pharos said she believed the MPC left rates unchanged for fundamental reasons, including a gradual decrease in global commodity prices and less pressure on the budget.

"We had that view even before the change in governor," she said.

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Kazakhstan Anticipates Completion of ACWA Power’s Wind Energy Project

ACWA Power announced in March that it would execute the project, which will aid Kazakhstan in reaching its goal of sourcing 50% of its energy from clean resources by 2050. (Photo: ACWA Power)
ACWA Power announced in March that it would execute the project, which will aid Kazakhstan in reaching its goal of sourcing 50% of its energy from clean resources by 2050. (Photo: ACWA Power)
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Kazakhstan Anticipates Completion of ACWA Power’s Wind Energy Project

ACWA Power announced in March that it would execute the project, which will aid Kazakhstan in reaching its goal of sourcing 50% of its energy from clean resources by 2050. (Photo: ACWA Power)
ACWA Power announced in March that it would execute the project, which will aid Kazakhstan in reaching its goal of sourcing 50% of its energy from clean resources by 2050. (Photo: ACWA Power)

Kazakh Ambassador to Saudi Arabia, Madiyar Menilbekov, announced that his country eagerly anticipates the completion of ACWA Power’s first wind energy project in the Zhetysu region. This project, led by the Saudi company, will have a total capacity of 1 gigawatt and an investment value of approximately $1.5 billion.
ACWA Power announced last March that it would execute this project, which will aid Kazakhstan in reaching its goal of sourcing 50% of its energy from clean resources by 2050. Construction is expected to commence in the summer of 2025.
Menilbekov told Asharq Al-Awsat that both countries “have established a solid political dialogue at a high level, along with cooperation in trade, economics, culture, and parliamentary exchange.” He expects this high-level dialogue to continue at the upcoming COP 16 summit in Riyadh.
He further emphasized that trade, economic, and investment cooperation is the cornerstone of the bilateral relationship, noting: “Both countries share a similar outlook on economic development, reflected in Kazakhstan’s Strategic Program 2050 and Saudi Arabia’s Vision 2030.”
The Kazakh ambassador highlighted that last September, the Islamic Development Bank approved financing for projects in Kazakhstan focused on water resource development, enhancing agricultural productivity, and ensuring food security, with total allocations amounting to $1.153 billion.
In tourism, he noted significant progress toward establishing direct flights between the two countries. Air Astana launched flights between Shymkent and Jeddah in October and announced a route from Almaty to Medina, bringing the total to six direct flights. Additionally, Kazakh companies in construction, oil services, and IT have recently opened offices across Saudi Arabia. The Farabi Innovation Center was inaugurated in Riyadh to attract talented entrepreneurs and innovative startups from Nur-Sultan and Central Asia to the Kingdom.
Menilbekov explained that since gaining independence, Kazakhstan’s GDP has grown 17-fold, with foreign trade reaching $139.8 billion last year. He added: “Since 1993, Kazakhstan has attracted a total of $441 billion in foreign direct investment, allowing our economy to remain one of the most dynamic in Central Asia and the post-Soviet region.”
According to Menilbekov, Kazakhstan is the world’s largest producer and exporter of natural uranium, responsible for more than 45% of global production and exports. He also noted that Kazakhstan produces 18 of the 34 raw materials identified by the European Union as “critical materials.”
Menilbekov further mentioned that Kazakhstan possesses 200 million hectares of agricultural land, with about 100 million hectares currently under regular cultivation.