Central Bank board reshuffled, ex-governor Oqda back on staff

In a decreee published in Thursday’s Official Gazette, President Abdel Fattah al-Sisi reshuffled the Central Bank of Egypt’s coordination council, appointing former Central Bank Governer Farouk al-Oqda to the committee and extending the term of prominent economist and bond trader Mohamed al-Erian.

The announcement came on the last official day on the job for outgoing CBE Governor Hesham Ramez. He will be succeeded by Tarek Amer.

Although Ramez has been celebrated abroad, winning accolades including being selected by the IMF and World Bank as the MENA region’s best central bank governor, many of his policies proved controversial domestically.

Ramez was heavily criticized for his management of Egypt’s foreign exchange policy, which put him at odds with members of the government. Facing downward pressure on the pound and diminishing foreign reserves, the Central Bank introduced currency control policies that restricted the withdrawal and deposit of dollars.

The policies left many businesses short of the hard currency needed to pay import bills, and have been blamed for a decline in business activity in Egypt.

Despite these policies, the pound continued to depreciate, foreign reserves remained low and inflation high. Many of Egypt’s current economic woes are driven by structural problems, such as Egypt’s widening trade deficit, but Central Bank policies became a focus of ire in both the cabinet and the business community.

Since Ramez announced his planned retirement last month, the bank has given a series of signals that policy will shift under new leadership. On November 11, the same day Ramez appointed his deputy Gamal Negm as caretaker governor, the CBE raised the official value of the pound against the dollar by 20 piasters, confounding expectations of a continuing slide for the currency.

This month, Egypt’s state owned banks introduced high-yielding savings vehicles, hinting at a possible move towards a contractionary economic policy and suggesting an increased level of coordination between the public-sector banks, the Central Bank and Cabinet.

The appointment of a senior figure like Oqda to the coordination committee, which is responsible for liaising with the government to set policy goals, further reinforces the message of cooperation among Egypt’s economic authorities.