There is no quarrel between the government and the Central Bank of Egypt (CBE) president Farouk al-Okda, but each of them has a goal to achieve. The government does its best so that its goal would not be at the expense of al-Okda, who in turn tries hard to achieve his without clashing with the government. Al-Okda has concerns over two things; the first thing is savers' tendency towards dollarization, namely betting on the dollar's high exchange rate in the future and turning the deposits from the national currency to the dollar. The US dollar now equals LE 5.4, so 100 US dollars equal LE 540, but if the dollar increased in the future to equal LE 7, this means that the $100 will equal LE 700 and, accordingly, those who turned their deposits from the Egyptian pound to the dollar will get LE 160.
This was followed by currency dealers in the past till al-Okda came and put an end to this problem. Indeed, he must be given credit for that. The second thing over which he has concerns is the high rate of inflation, as al-Okda tries hardly to bring it down. This is, in fact, his role that nobody should interfere with.
On the other hand, the government wants an influx of foreign investment and a boom in domestic investment, which would in turn create new jobs. It also wants to encourage exports, face depression, fight recession, and support local products to be up to world competition. Therefore, the government needs to reduce interest rates on loans, a decrease rejected by al-Okda unless there was a retreat in inflation lest people resort to the dollarization once again.
Indeed, whoever contemplates in the two goals will immediately discover that there is conflict between the two, but there is a safety zone where the two parties can meet because the government, for example, is betting on not dealing with inflation from a historical but rather from a futuristic perspective.
This perspective shows that the inflation rate would inevitably retreat in the coming period due to many reasons, such as the notable decline in prices of many commodities and the sharp drop in domestic consumption.
Anyone following up satellite channels will notice a continuous coordination between central bank heads and finance ministers in all countries as was the case with "Bernanke", the US Federal Reserve head and "Paulson", the US Treasury Secretary, as the two men have never met people separately. Anyone following up the world news will also discover a big increase in the number of meetings of the board of directors of central banks and committees on monetary policies all over the world. In fact, world central banks face a stormy crisis. Therefore, they hold meetings every two or three days at the most and not every two or three months as was the case in the past. Unfortunately, this does not happen in Egypt although we are in bad need for such meetings.
When will the CBE president appear with his hands in the hands of Minister of Finance Youssef Boutros?
