The Arab Banking Conference 2022
Wednesday، 18 May 2022 - 12:00 AM
The Governor of the Central Bank of Egypt (CBE) Tareq Amer participated, on Wednesday 18-5-2022, in the Arab Banking Conference 2022, which is organized by the Union of Arab Banks under title "the repercussions of the international crisis and its impact on economic conditions in Arab region."
The 2-day conference is scheduled to be held during the 18th and 19th of May 2022 at JW Mariot hotel in Cairo.
The Speakers of the Arab Banking Conference 2022
In his speech, the Governor of the Central Bank of Egypt (CBE) Tarek Amer said there are proactive measures to confront any international crises, asserting that these measures secured economic protection from fluctuation, noting that Egypt did not feel the fallout of the coronavirus pandemic.
The governor stressed during the conference that the central bank’s intervention during the Coronavirus crisis by pumping liquidity from the international reserve and maintaining exchange rates kept the economy from suffering a price crisis, noting that CBE was selected among the best 10 central banks in the world.
The Central Bank had, also, raised the interest rate by 1 percent in an extraordinary meeting in March, and the National Bank of Egypt (NBE) and Banque Misr had issued a savings certificate with a return of 18 percent to counter inflationary pressures.
He noted that international reserves are not sacred, but are built for the benefit of using them in the service of the citizen, pointing out that the support of the political leadership of the Central Bank of Egypt played an important role in declining inflation to 3 percent, until the Russian-Ukrainian war took place.
Amer, also, said the CBE's policies vis-à-vis exchange market are flexible and aim to make the Egyptian pound the winner in the medium term.
He said that the bank also maintained its lending levels, adding that the exchange rate changed over the Russian-Ukrainian crisis, causing hard currency revenues to boost.
He asserted that the Egyptian banking sector is the last institution that could suffer from problems.
Amer said negotiations with the International Monetary Fund are going on well, noting that the banking sector has injected funds into various economic sectors.
He stressed that the Egyptian banking sector is strong and has huge liquidity as the loan-to-deposit ratio is 45 percent in Egyptian pound and the liquidity stood at 67 percent in hard currency.
Amer pointed out that the Egyptian banks exerted strenuous efforts during the coronavirus crisis and managed to overcome its repercussions.
He stressed that thanks to the high-professional management of the banking sector, the irregular debt rate dropped and the hard currency reserves rose by 30 percent, noting that the emerging markets were largely affected by international crises.
Amer, also, said that the CBE works on the financial inclusion strategy whose achievement rate reached 56 percent, adding that the CBE seeks to realize great development in e-payment and digital transformation.
Amer stated that the policy adopted by the Central Bank of Egypt (CBE) succeeded in reducing the non-performing debt rates in the market to 3.5 percent by the end of December 2021, compared to 45 percent in 2003.
He added that the capital adequacy standard recorded 25.5 percent by the end of December 2021, compared to 14.5 percent in 2017, while the global average for the capital adequacy standard recorded 12 percent.
Moreover, the Egyptian Central Bank will not hesitate to take all necessary measures to curb inflation in the future.
The Monetary Policy Committee of the CBE is scheduled to hold a regular meeting on Thursday, May 19, 2022, to discuss the fate of interest rates, after the US Federal Reserve announced 0.5 percent this month.
Following this decision, the exchange rate of the pound against the dollar fell by 17 percent within two days of the decision.
Amer added that banks provided huge financing to the economy during the Corona crisis, and they maintained employment and price levels, and companies' production doubled during 2020 compared to 2019, which made economic growth reach very high levels.
He pledged that investing in the Egyptian pound would be more profitable than other currencies in the medium term, adding that the Central Bank had agreed to the NBE and Banque Misr to issue a savings certificate at 18 percent to support the Egyptian citizen.
Amer pointed out that “The country had made a simple correction in the exchange rate to avoid the effects of the Russian-Ukrainian crisis, which was reflected in an increase in foreign flows by about 30 percent during last March.”
He also noted that the Central Bank used the liquidity of Egyptian banks during the Corona crisis to pay the outstanding obligations and prevent shocks, which enhanced foreign investors’ confidence in Egypt, indicating that these measures succeeded in choosing the Central Bank of Egypt as the top 10 banks in the world.
Amer indicated that the Egyptian banking system includes 38 million bank accounts, stressing: "In every Egyptian home there is an individual who deals with banks."
The CBE’s governor added that the percentage of liquidity in the local currency rose to 45 percent, and in foreign currency it amounted to 67 percent, and the ratio of loans to deposits hit 48 percent, which reflects the state's ability to enhance the financing of its projects.
For his part, Vice-President of the Union of Arab Banks and President of Banque Misr, Mohamed El-Etreby, said that global fluctuations led to high inflation rates, a decline in some countries' foreign exchange resources, disruption of supply chains, and an increase in shipping costs.
El-Etreby called for the need to crystallize a unified Arab position to overcome this crisis, to strengthen structural reforms in Arab countries, and the role of the Arab banking sector to get out of the current crisis with minimal losses.
Sheikh Muhammad Jarrah Al-Sabah, Chairman of the Board of Directors of the Union of Arab Banks, called for strengthening Arab cooperation, encouraging agricultural investment among Arab countries, enhancing their food security and not relying on imports to meet the current challenges.
Conference Agenda and Topics of discussion
Session 1: “The impact of the international crisis on Arab food security”
- Scenarios of interruption of wheat, corn and grain imports from Russia and Ukraine to the Arab countries and the available alternatives in the short and medium run.
- Investing in agricultural projects among Arab countries to achieve self-Arab food security.
- Food security indicators for Arab countries.
Session 2: “The rise in global oil and gas prices and the alternatives”
- What are the benefits of the Arab oil-exporting countries from increasing prices.
- Achieving balance in global oil markets by increasing the exports of Arab countries.
- Investments opportunities for Arab banking sector in alternative energy.
Session 1: “The interaction of Arab financial markets with the crisis and the prospects for remittances”
- Transferring global investments and deposits to Arab markets and banks.
- Repercussion of crisis on capital markets & stock exchange.
- Potential increase in inflation & raising interest rates.
Session 2: “Risks facing global economic growth in light of the international geopolitical crisis”
- The emergence of new economic and financial alliances and blocs
- The decline in global economic growth as a result of the crisis
- Effects of the crisis on poor and highly indebted countries
Session 3: “Sustainable Finance for Adaptation and Mitigation”
- The role of private sector in combating climate change.
- Investing in green technology and sustainable finance in the Arab region.
- Investing in low emissions economic and social development.
- Role of Green Banking in achieving sustainable development.
During the opening ceremony of the conference, a number of Arab personalities, who played a prominent role in the fields of banking and economic development, were awarded, namely:
➢H.E. Dr.Ziad Fariz, Former Governor of the Central Bank of Jordan.
He was awarded “Governor of the Year Award for 2021”
➢Mr. Adel AbdulWahab Al Majed, Vice Chairman & CEO, Boubyan Bank, Kuwait.
He was awarded “Arab Banker Award for 2021”
➢H.E. Dr. Mahmoud Mohieldine, Special Envoy on Financing the 2030 Agenda for Sustainable Development -United Nations, Pioneer of the Climate Summit & Executive Director- International Monetary Fund (Representing Arab Group), Washington.
He was awarded “Leadership Visionary Award for 2022”
At the beginning of 2022, the World Bank and the International Monetary Fund released their forecasts for the current year’s economic growth, and expected a slowdown in global growth and a decline of 1.4% compared to 2021, due to the extended Covid-19 pandemic, the decrease in financial support in the major advanced economies, and the continuous supply bottlenecks.
Then, the Russian-Ukrainian crisis erupted, which turned into a large-scale war in Ukraine, adding more pressure on the global growth, and prompting the two international financial institutions to add further reductions to their growth expectations, as a result of fears of the interruption of energy supplies to Europe mainly, which already resulted in a surge in oil prices to record levels.
With the outbreak of the Russian-Ukrainian crisis, the United States of America, the European Union, and a number of other Western countries imposed wide and severe sanctions on Russia, covering a wide range of economic, financial, banking, and commercial sectors. These sanctions are increasing day by day and at a great pace, the most important of which is the decision to separate Russia from the SWIFT bank transfer system and to prevent Russian banks from dealing with this system. While this decision will have significant repercussions on the Russian financial system, it will also lead to negative repercussions on the global financial system. On the other hand, the war erupting on Ukrainian lands may lead to a complete halt to its exports, the most important of which are exports of grain and oils. In parallel, the sanctions of Western countries against Russia may prevent it from exporting its agricultural production, which will exacerbate the repercussions of the crisis on food security in many countries, especially the Arab countries.
While this crisis poses a threat to the Arab region in terms of food security, it may lead to the emergence of many opportunities for Arab countries, including the rise in oil revenues for oil-producing countries, which is positively reflected in other countries in many areas and channels, such as direct investments and expatriate remittances, and the possibility of transferring money from Russia due to sanctions to the Arab region, as well as the serious endeavour to enhance Arab food sufficiency by investing in the agricultural sector among Arab countries.In light of all this, the Union of Arab Banks seeks to hold its annual banking conference entitled “The Repercussions of the International Crisis and Its Impact on the Conditions in the Arab Region” in Cairo, to present the multiple challenges and risks that pressure the prospects for global and Arab economic recovery, and the challenges facing the Arab region in light of the new geopolitical crisis, and how to transform these challenges into opportunities by setting appropriate policies and procedures to contain them and reduce their repercussions on economic growth and sustainable development in the Arab region.