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Tuesday, 23 May 2017

Nation’s talking heads have Interest rate hike, subsidies, and private school tuition caps on the brain

As it should have been, the CBE’s decision to hike interest rates by 200 bps on Sundaydominated the airwaves last night.

On Kol Youm, Amr Adib spoke to National Bank of Egypt (NBE) Vice Chairperson YehiaAboul Fotouh, who believes the hike will only negatively affect “large clients” including manufacturers with significant debt. He also suggested the hike will force many companies to tighten their payment terms. Aboul Fotouh also said that the decision will help banks attract liquidity, since it makes deposits more attractive, with interest rates that could climb to highs of 13% on one-year CDs (watch, runtime: 7:03).

Banque Misr Chairman Mohamed El Etreby told Adib that the hike will not affect high-yield CDs, which will remain fixed at 16% and 20% rates, nor will it see banks raise rates for small business financing offered under the central bank’s SME initiative. The interest rate hike will not impact the central bank’s mortgage finance initiative either, he reportedly told Al Masry Al Youm earlier in the day. Banque Misr however is yet to decide if it will increase its own interest rates on deposits and savings, but it very well might, El Etreby said (watch, runtime: 2:08).

Adib also spoke to Acumen-BPE Chairman Hany Tawfik on his opposition to the ratehike. Tawfik explained that the central bank has other tools to employ to attract liquidity, arguing that the hike is likely to further inflationary pressures and add some EGP 60 bn to the government’s debt service burden, which he sees reflecting on the budget deficit (watch, runtime: 3:52).

Economist Hany Genena, on the other hand, said the hike was justifiable, saying that it was a preemptive move to avoid another FX crunch later on in the year, as it’s expected to help bolster foreign currency inflows. Genena acknowledged that market growth will suffer temporarily due to the CBE’s decision, but said that it was necessary to make sacrifices now to avoid falling into old pitfalls later (watch, runtime: 4:08). In the meantime, the government needs to strengthen the social safety net to cushion low income earners.

Elsewhere, Supply Minister Ali El Moselhy told Al Hayah Al Youm’s Lobna Asal that he promised MPs he would speak with his colleagues in cabinet about increasing monthly subsidy card allowances to help welfare beneficiaries keep up with rising inflation (watch, runtime: 2:24).

Lamees also spoke to Supply Minister Ali El Moselhy about the Ahlan Ramadansupermarket expo, which was launched yesterday by El Moselhy, Prime Minister Sherif Ismail, and Trade Minister Tarek Kabil with over 200 companies participating, according to Al Ahram. El Moselhy told Lamees that the expo will continue to run throughout the holy month instead of wrapping up on 26 May as was originally planned (watch, runtime: 8:26).

Meanwhile on Yahduth Fi Misr, Sherif Amer discussed the new caps on private schooltuition increases with Education Minister Tarek Shawky, who said that the decision — which came after a discussion at the cabinet table — is meant to protect parents from “random” and “unjustified” increases of up to 20-30%.

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