most eagerly anticipated event of 2015 wasn’t the open- ing of “Star Wars: The Force Awakens.” What Egypt’s busi- ness community was really waiting for was the Nov. 27 arrival of Tarek Amer, the new Central Bank governor. Egypt, strug- gling under persistent dollar shortages, hoped Amer would bring with him sore- ly-needed clarity and vision after several years of opaque and often counterintuitive monetary policy.
Hisham Ramez stepped down early as CBE governor on Nov. 11, capping what was a difficult term right from the begin- ning. Just 10 days into his tenure, in January 2013, masked gunmen attacked his convoy. Facing slower-than-expected growth and high inflation, Ramez defend- ed the pound against the dollar, which ultimately drew criticism. In his final year in particular, he took a lot of heat for levy- ing a series of unpopular capital con- trols—mainly limits on dollar deposits in banks—meant to do away with the paral- lel exchange rate, which has unnerved investors. But in the end, Ramez’ policies failed to eradicate the black market or bring more dollars into the system. Critics say propping up the pound has hurt Egypt’s competitiveness while allowing foreign reserves to dip to dangerous lev- els. Meanwhile, the deposit limits left many businesses unable to get the dollars they need to buy key imported supplies. Egypt’s non-oil business activity shrunk during eight out of the first 11 months of last year. In November, the Emirates NBD Purchasing Managers Index for Egypt fell to its lowest level since September 2013. “Once again, respon- dents are citing FX issues as a factor that is resulting in declining output across the private sector,” said Jean-Paul Pigat, a senior economist at the bank, in a state- ment. Egypt’s economic recovery will depend on “authorities easing capital con- trols and allowing the pound to weaken in 2016,” he said.
No wonder the market seems to be holding its breath in anticipation of