The Central Bank of Egypt's (CBE) new Board of Directors will start carrying out its duties officially next Sunday, 29 November, under the leadership of its new Governor Tarek Amer. The Board was supposed to start working on 27 November, in accordance with President Abdel Fattah Al-Sisi's decision, but that day will be a Friday, an official day off in the CBE and banks operating in the official market, which delays the date to 29 November, a Sunday. Al-Sisi issued a presidential decree on Wednesday to reform CBE's board. According to the presidential decree No. 428/2015, the new CBE board of directors includes its governor Tarek Hassan Amer, and deputy governors Gamal Abdel Aziz Negm and Lobna Mohamed Helal. The CBE's board of directors also include Egyptian Financial Supervisory Authority chairman Sherif Samy as a representative for Ministry of Finance , two economic experts Hala Helmy El-Said and Laila Ahmed Al-Khawaga, legal expert Yehia Ahmed Ragheb El-Dakroury, and financial and economic experts Kamal Samaan Bebawy Aboul Kheir. The term of office of the experienced members in CBE's board of directors will last for four years, starting on 27 November 2015. According to a former CBE governor and Chairman of Misr Iran Development Bank, Ismail Hassan, the file of the exchange rate is the most important file for the new board. Although Hassan noted that predicting the decisions and procedures the new board will make is difficult, he expected the new team to revise the decisions related to monetary policy and the exchange market made in the past, making decisions and procedures that suit the circumstances in Egypt. The new CBE board faces six major challenges in the upcoming period as the body responsible for managing the country's monetary policy. Managing the exchange market is one of the most difficult missions and challenges the new board will face and will require significant efforts. Rebuilding the foreign exchange reserves comes on top of the challenges the board is facing, especially after losing a significant part in the past few years. In spite of the inflation rate's downtrend in the last months, analysts believe it could be a temporary situation and that the inflation has the potential to increase again, which stands as another challenge for the CBE and its new leaders. The banks operating in the Egyptian market since the 25 January Revolution in 2011 until now face a severe crisis in investing their local liquidity with the decline in loaning operations and limit in the banks' investments to the governmental debt instruments and at the CBE within the corridor and deposits mechanisms. This is in addition to funding operations that are being active sometimes and decrease other times. According to analysts, that crisis is one of the strongest challenges the CBE and banks will have to face in the next period, if the economy remains dormant and projects are not proposed to absorb the major liquidity in banks. The file of the interest rate on the Egyptian pound is also a difficult file for CBE, where it is demanded to strike the required balance between investment and public debt's need for low interest rate and between taking into consideration the social aspect of depositors and their need for a high interest rate. Banks are the largest funders for the state's general budget deficit by covering the debt instruments the government issues weekly. With the expectations about the beginning of recovery of the Egyptian economy and consequently directing the banks' liquidity to fund the projects instead of investing it in bills and bonds, another challenge appears for the CBE and the Egyptian banking sector. The CBE has strongly intervened in the last few days to support the pound against the dollar. The CBE reduced the dollar's price against the pound by EGP 0.2 in banks, decreasing the dollar price to EGP 7.8301, while it amounted to EGP 7.78 in banks for buying, and EGP 7.8301 for selling. That step was accompanied by another step by the CBE covering 25% of the temporary credit facilities the banks granted its importer clients in the last period, which the importers failed to pay because of the dollar crisis. The large public banks issued savings certificates with a high return amounted to 12.5%, to attract citizens to save in pounds rather than acquiring dollars or at least fixing the demand on it, not increasing it. According to Director General of the Treasury and Capital Markets at the Industrial Development and Workers Bank of Egypt Haitham Abdel Fattah, these measures taken by the CBE and public banks stand as a message that the exchange market is improving in the next period and that the CBE is standing on solid ground. Abdel Fattah said banks are awaiting other moves to be taken by the CBE in the next few days after reforming its Board of Directors under the leadership of Tarek Amer, to grant the market more stability.
