Egypt’s president on Thursday named a new head for the country’s central bank, after the resignation of the longtime chief amid a crippling economic crisis and pound devaluation.
Hesham Ramez, an executive from one of Egypt’s largest private banks, will replace Farouq El-Okdah, who has been the bank’s governor for nine years, according to presidential spokesman Yasser Ali.
El-Okdah and Ramez sought on Thursday to reassure markets, investors and Egyptians over the handover of a key post at a deeply uncertain time. The central bank says Egypt’s foreign currency reserves have hit a “critical minimum level” after being drained by more than half over the past two years to around $15 billion. Revenues from tourism and foreign investment have tumbled amid the unrest since the uprising that toppled President Hosni Mubarak, even as the government has had to bleed hard currency to prop up the Egyptian pound, keep up with debt payments and buy vital imports.
At the same time, the government of Islamist President Mohammed Morsi tried to put together a plan for halting the economic slide, which is likely to include the reduction of some vital subsidies on foodstuff and fuel that Egypt’s poor rely on.
“We had a difficult two years,” El-Okdah said, appearing Thursday with Ramez at the presidential palace. “Despite that, the economy is tenacious. We have problems no doubt, but we have what it takes to get out.”
El-Okdah has made clear for the past year that he wanted to step down, but there were widespread concerns that his departure could further unsettle the economy. Egypt is negotiating a critical $4.8 billion loan from the International Monetary Fund, already delayed because of the political tension. A report of his resignation last month rattled markets briefly until it was announced he was staying on.
El-Okdah said the solution of the economic problems lies in resolving political disputes which have further hit investor confidence in the economy. The country has been deeply divided since a political dispute over the recently adopted constitution spiraled into street protests and violence.
He said the worry now was not the value of the pound since a system is in place to regulate it. The bank recently started auctioning dollars to control the drain of the dollar in the market because of hoarding and speculation. In only a few weeks, the pound fell to around 6.5 to the dollar down from 6.1 in December.
“The last thing I need to worry about is the exchange rate,” he said. The chief concern now is to increase revenues to cover increasing budget and trade deficit and bring in foreign investment.
Ramez, who previously was the central bank’s deputy governor for foreign reserve and monetary policies, said the bank has “all the tools to intervene if we think there is speculation or against the market. What we care about is to make it a natural balanced market.”
“I would like to reassure you. There is nothing to make us worry because we look at the prices momentarily and daily. It is not out of control. We will be able to control it.”
Some in the political party of the Muslim Brotherhood, from which Morsi hails, have suggested El-Okdah was to blame for mismanaging the country’s reserves. There have been hints of tension between the bank head and Morsi’s administration, which came into office in June.
But on Thursday, El-Okdah said his resignation was not from political reasons but in line with the newly passed constitution that limit terms of public office. Trying to sound a further note of reassurance, he referred to Ramez as his “student.”
Ramez has been vice chairman and managing director of the Commercial International Bank since 2011, and has been on the board of several banks. He is expected to start in the governor’s post in February after his nomination is formally approved by the upper house of parliament.
The Associated Press
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