In the quiet language of a presidential statement, Egypt's central bank governor Tarek Amer stepped aside, and the nation's most populous Arab state was left to weigh its currency, its bread and its hope of a steadier future. The reasons were not spoken aloud, which in a country buffeted by a distant war, a vanished tourist trade and a pound in retreat leaves room for the many tensions that analysts describe within policymaking circles. Amer, who had guided the monetary order since 2015, now leaves the post for an advisory role, while the question of who will take up his task and whether the c
Egypt's Central Bank Governor Tarek Amer Resigns Amid Inflation, Currency Slide and Policy Tensions
Inflation pressure from rising prices and a sliding currency is burdening lower-income households, where about a third of Egyptians live in poverty.
Resigned with no reason given and no successor named
Mark
Why does the governor of a central bank leaving matter so much here?
Mimi
Because he ran the institution that decided to let the pound fall about 16% in March. Now the currency is past 19 to the dollar and inflation hit 14.6% in July.
Mark
And the presidency said why he left?
Mimi
No. The statement was brief, gave no reason, and named no replacement. He was made a presidential adviser.
Luke
That's the key gap. The reason for the resignation isn't confirmed. The tensions over policy are one economist's reading, Jason Tuvey's, not something the government has said.
Mark
What is that reading, exactly?
Mimi
That some officials oppose devaluation and prefer rationing gas by curbing electricity use, while Amer was seen as backing depreciation to help secure an IMF loan.
Luke
Note the wording: he was traditionally seen in that camp. That's a perception. Same with the forecast of 25 pounds to the dollar by end of 2024. It's one firm's prediction.
Mark
What does this mean for ordinary people?
Mimi
About a third of Egyptians live in poverty by government figures, and grains cost at least 50% more than before the pandemic. Egypt gets about 80% of its wheat from the Black Sea region.
Luke
Worth saying the 130 billion pound aid package was announced before the devaluation. How much it has offset the price rises isn't covered here.
Mimi
Right, and the successor's identity will say a lot about which direction policy takes.
Le Pouls
- Inflation climbed to 14.6% in July, and the Egyptian pound has slipped past 19 to the dollar after a sharp devaluation in March.
- Officials are divided between letting the currency fall to secure IMF support and rationing gas and electricity, a choice that could slow business.
- The presidency offered no reason for Amer's exit and named no successor, leaving markets and households to read the silence.
- A government reshuffle touching 13 ministries and the tourism portfolio has unfolded while roughly a third of Egyptians struggle in poverty.
- Gulf investment and a large assistance package offer cushioning, yet the pound's trajectory and the choice of the next governor remain unsettled.
In the quiet language of a presidential statement, Egypt's central bank governor Tarek Amer stepped aside, and the nation's most populous Arab state was left to weigh its currency, its bread and its hope of a steadier future. The reasons were not spoken aloud, which in a country buffeted by a distant war, a vanished tourist trade and a pound in retreat leaves room for the many tensions that analysts describe within policymaking circles. Amer, who had guided the monetary order since 2015, now leaves the post for an advisory role, while the question of who will take up his task and whether the currency can find firmer ground remains open.
On Wednesday, Egypt's central bank governor, Tarek Amer, stepped down. A brief statement from President Abdel Fattah el-Sissi's office accepted his resignation, named him a presidential adviser, gave no reason and named no successor. Amer had led the central bank since November 2015 and had faced criticism for how he handled the country's financial troubles.
Egypt is under heavy strain. Inflation, fed by Russia's war in Ukraine, high oil prices and a collapse in tourism, reached 14.6% in July. The pound has slid past 19 to the dollar after a March decision to let it lose about 16% of its value, a move meant to narrow a widening trade deficit. Jason Tuvey of Capital Economics saw the resignation as a sign of deep friction among officials, some of whom oppose devaluation and prefer rationing gas through electricity cuts, a step that could hurt business. Amer had been seen as a champion of depreciation, a path many believed would help secure an IMF loan. His firm expects the pound to reach 25 per dollar by the end of 2024.
The departure came days after parliament approved an emergency reshuffle affecting 13 ministries and replacing the tourism minister. Tourism, which employs millions, has been battered by turmoil, the pandemic and now the war, and Russians once made up about a third of visitors. The war has also strained food supplies: Egypt, the world's largest wheat importer, buys about 80% of its wheat from the Black Sea region, and grain still costs at least 50% more than before 2020.
The weight falls hardest on the poorest. With about a third of Egypt's 103 million people in poverty, a 130 billion pound assistance package aimed at wages, pensions and cash aid offers some relief. Gulf allies, buoyed by high oil prices, have added multibillion-dollar investments, including a $1.3 billion first wave of deals from Saudi Arabia's Public Investment Fund. For now, two questions remain: who will replace Amer, and whether the pound will keep falling.
On Wednesday, Egypt's central bank governor, Tarek Amer, stepped down. The announcement came in a brief statement from President Abdel Fattah el-Sissi's office, which said the president had accepted the resignation and named Amer a presidential adviser. The statement gave no reason for the departure and did not name a successor. Amer had held the governor's post since November 2015, and he had faced criticism over how he handled Egypt's financial troubles.
The backdrop is a country under heavy economic strain. Egypt, the most populous nation in the Middle East, has been fighting inflation driven by Russia's war in Ukraine, high oil prices and a fall in tourism. The Egyptian pound has slid to more than 19 to the dollar. That followed a March decision by the central bank to let the currency lose around 16% of its value, a move meant to narrow a growing trade deficit.
Jason Tuvey, a senior emerging markets economist at Capital Economics, read the resignation as a sign of friction at the top. He said there appear to be many tensions within policymaking circles, and that these ultimately led to Amer's exit. According to Tuvey, some officials oppose devaluing the pound and favor other measures, such as rationing gas consumption by cutting electricity use, which could hurt business activity. Amer had long been seen as part of the camp backing depreciation as a way to secure a loan from the International Monetary Fund. Capital Economics, a London-based research firm, expects the pound to keep sliding, to 25 per dollar by the end of 2024.
The resignation followed a government shake-up. On Saturday, parliament approved a reshuffle in an emergency session that affected 13 ministries, among them health, education, culture, local development and irrigation. The minister of tourism and antiquities was also replaced. Tourism employs millions of Egyptians and has been battered by years of turmoil, the COVID-19 pandemic and now the war. Before the conflict, about a third of the tourists coming to Egypt were Russian.
The war has reached Egypt in other ways. It is the world's largest wheat importer and gets around 80% of its wheat from the Black Sea region. In the first weeks after the late-February invasion, wheat and other grain prices shot up, as did fuel. Prices have eased somewhat, but grains still cost at least 50% more than before the pandemic in early 2020, and shipping grain out through the Black Sea remains expensive.
The pressure falls hardest on households with the least room to absorb it. Inflation across the country of 103 million people reached 14.6% in July, and government figures put about a third of Egyptians in poverty. The World Bank notes that just before the March devaluation, the government announced an assistance package worth 130 billion pounds, more than $8 billion. It was designed to raise public-sector wages and pensions and expand direct cash assistance.
Egypt's Gulf Arab allies have also stepped in with multibillion-dollar investments, supported by oil prices that have lifted their own finances. Saudi Arabia's sovereign wealth fund, the Public Investment Fund, recently set up a division in Egypt that has already announced deals worth $1.3 billion, with a goal of drawing $10 billion into the country.
Two things to watch now: who is picked to replace Amer, and whether the pound keeps falling.
Citations marquantes
There appear to be a lot of tensions within policymaking circles, and that is ultimately what led to Amer's resignation.— Jason Tuvey, senior emerging markets economist, Capital Economics
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