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President Mohamed Morsy will issue a decree within days that would give him more power over Egypt’s Central Bank, according to a Tuesday report on the website of state-owned Al-Ahram newspaper.
By amending one of the statutes that govern the bank and its officials, Morsy will be able to appoint more of the bank’s board members. Under current law, the governor of the Central Bank is largely responsible for appointing the governing board’s members.
The decree, published on Al-Ahram’s website, will amend Central Bank Statute No. 64/2004, which specifies the membership of the bank’s governing board. According to the Al-Ahram, Morsy has already obtained the Cabinet’s approval on the decree.
The decree will cut the number of board members to nine as opposed to 15 under the formal law, and gives the president the power to appoint at least four economic or monetary experts, in addition to ministry representatives and the governor.
The current law, issued in 2003 by former President Hosni Mubarak, also allowed the bank’s governor to appoint an unlimited number of deputies that would also sit on the board.
At the time of its issuance, the law was criticized for infringing on the bank’s independence.
By law, the Central Bank of Egypt is an independent entity with the power to devise and implement the general monetary objectives of the government. Like many central banks around the world, the bank is designed by law to be as independent as possible so that the state’s economic policy is not affected by changing political tides.
The CBE has largely maintained its independence throughout Egypt’s transitional period, during which the bank has been carefully managing the value of the country’s currency.
Despite the political upheaval and intense international market pressure for devaluation, the Egyptian pound has slowly and incrementally lost value, but there have been no dramatic drops.
On 11 December, the pound reached its lowest value in eight years of 6.1505 pounds to the dollar on and its total decline since the January 2011 uprising has been 5.4 percent, according to figures from the financial news service Bloomberg.
Considering the circumstances, some experts say that it has been a remarkable feat of currency management, one that earned CBE Governor Farouk al-Oqda the Euromoney award for best central bank governor in the Middle East and North Africa in 2011.
Oqda became governor of the Central Bank in December 2003, succeeding Mahmoud Abul-Eyoun. He was reappointed to a third four-year term last November by the Supreme Council of the Armed Forces.
But the currency management has also meant that the bank has had to burn through approximately 58 percent of its total foreign currency reserves in the past year, according to Bloomberg. The bank has spent roughly US$1 billion per month in foreign reserves — mostly dollars — to buy up pounds and keep the value from slipping.