SUMMARY OF ARTICLE :Egypt Devalues Its Currency, At Last

article is about the devaluation of currency that has recently been done by the government of Egypt (Cairo, 2016). First of all, the author gave some background about the economic condition of Egypt. It has been illustrated in the article that the position of the country is critical and the government is responsible for taking tough decisions in order to drag the country out of it. Although, the Egyptian government has taken some crucial decisions for overcoming the economic crisis, like the implementation of value-added tax (VAT) for providing benefits to state finances, but still government could not have completely saved the country from economic crisis. At that point in time, the government decided to devalue the Egyptian pound. While devaluing the currency, the government set the official exchange rate as 13 pounds against the dollar. Moreover, interest rates were also increased by the Central Bank of Egypt. It has been identified in the article that the government of Egypt decided to devalue the currency as it was in need of getting loan of $12bn from IMF. The country was under high budget deficit and was badly in need of cash. There was also a reduction in a number of foreign tourists and investors within the country, due to which cash inflow was also reduced. So, for getting cash in the form of a loan from IMF, the government took a big decision of devaluing currency. It has been found in the article that, although Egyptian government got some cash through devaluation of the currency and stock prices were also increased, but it has put a very negative impression and effects on citizens. All individuals have been directly or indirectly affected by this decision as it has resulted in high inflation.  Although government is trying to gratify the public but there is a need of formulating some effective monetary and fiscal policy in order to win the confidence of people.

References

Cairo. (2016, Nov 3rd). Egypt devalues its currency, at last. The Economist.

 

 


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