The burden of implementing the directive expressed by President Mubarak last Sunday in his speech before the People's Assembly and the Shoura Council [the two chambers of Egypt's parliament] is not shouldered only by the Governor of the Central Bank of Egypt Farouk el-Oqda, as the government must also take some steps beforehand. The Governor of the Central European Bank (CBE) Jean-Clude Trichet announced, after his meeting with Dr. el-Oqda in Cairo last Wednesday, that he was willing to cut interest rates on loans in euro once more after such rates had already been cut by 0.5% on October 8. Likewise, the Chinese central bank cut interests on loan by 1.08% last week, the fourth cut in two months. Yet, let us not forget that there is a difference between the situations here and there. Before the Parliament, President Mubarak explicitly called on the government to take a step like the one taken by the European and Chinese central banks. Therefore, the government's responsibility to implement such directive is not smaller – or is indeed bigger - than the responsibility shouldered by the Central Bank governor. A strong economic life in any state relies on two parallel policies: a financial one, carried out by the government, and a monetary one, which is one of the competences of the central bank and must be carried out in complete independence. The Central Bank of Egypt has a monetary policy committee holding regular meetings and deciding whether interest rates must be cut, raised or kept unchanged. However, there is also a supreme council for monetary policy. It was set up a year and a half ago and is chaired by the prime minister, but it seems totally absent during these days. Yet, the core of its work is to coordinate the government's financial policy with the central bank's monetary policy to face the repercussions of the global monetary crisis. I asked Dr. Mahmoud Abdel Aziz, former president of the National Bank of Egypt, whether el-Oqda can cut interest rates now to meet President Mubarak's directive and to boost investments in light of the current stagnation. He said this step is not possible now, adding that Dr. el-Oqda can make such as decision in at least three months, when the government will have arranged its financial policy as it should. He also thought the governor should not be exposed to such pressures now. Mahmoud Abdel Aziz reminds us that in this era the government must carry out not only its traditional functions such as defense, security and others. Instead, it now has three more functions to implement before calling on the central bank to cut quickly interest rates and bear the consequences of its negligence as a government. The government has to boost competition as much as possible, prevent monopoly in any way and be as a referee among different classes so that none of them takes on the other and prices are prevented from going up. The government must orient its public spending only toward what is necessary and productive without wasting money on luxuries. It also has to control this spending with strength and firmness and tell us where this supreme monetary police council is amid these difficult economic conditions. Farouk el-Oqda is the one who has to respond to the President's request in order to revive the economy, but not before the government has paved the road for him to do so. He is facing a real dilemma, as he cannot ignore the President's directive while the government is not helping him.
