Egyptian President Tries to Reassure his People about Liquidity Crisis
Egyptian President Hosni Mubarak tried Monday to reassure his people that the country's liquidity problems were under control, saying there would be no printing of extra money or devaluation of the pound.
"Be assured that everything is going fine, but the matter needs time," Mubarak said in an interview in Al-Gomhuriya newspaper, published Monday.
The president last week ordered the government to check economic "stagnation" by repaying some 25 billion Egyptian pounds (7.5 billion dollars) of state debts over eight months.
Again he did not specify exactly where the cash injection would come from, but said the money would be drawn from "real and genuine reserves."
"I will never allow the printing of (excess) banknotes because that would harm the economy and present us with an inflation problem," he said. Inflation officially stands at below three percent.
Prime Minister Atef Ebeid added in remarks published Monday, that "the days of printing banknotes are over."
Ebeid denied the existence of a liquidity crisis, arguing that a recent treasury bond issue had been oversubscribed, the government Al-Akhbar newspaper reported.
Mubarak also fended off fears of a devaluation of the Egyptian pound, which experts believe is overvalued. The pound is unofficially pegged to the dollar, and currently trades at 3.41-3.49 pounds for one dollar.
Lack of supply and high demand for the dollar has created difficulties in exchanging the pound, forcing the government to draw on its foreign currency reserves - (AFP)
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