Impact of interest rates on growth is limited: Minister

CAIRO – 16 July 2017: Egypt is still studying the effect of interest rates hike on the growth rates in the first quarter of fiscal year 2017/18, Minister of Planning and Administrative Reform Hala el-Said noted on Saturday.

The impact is expected to be limited as economic growth rates are affected by international and local changes, Said pointed out.

In an unexpected move by analysts, the Central Bank of Egypt (CBE) hiked, in early July, the overnight deposit rate to 18.75 percent from 16.75 percent and the overnight lending rate to 19.75 from 17.75 percent.

This is the third time the CBE has raised interest rates since the flotation of the Egyptian pound in November last year.

In a press conference with economy journalists, the minister said Q3 of the previous fiscal year witnessed a positive leap, as the growth rate was recorded at 4.3 percent, compared to 3.6 percent in the same quarter of 2015/2016 fiscal year.

The country's Gross Domestic Product (GDP) growth rate will not fall below 4 percent in fiscal year 2016/2017, compared to 4.3 percent in the previous year, Said added.

The initial budget deficit in the fiscal year 2016/2017 ranges between 10.4 to 10.5 percent of the GDP, compared to 12.5 percent in the 2015/2016 fiscal year, the minister said.