The Egyptian government should introduce economic reform measures gradually due to the rising inflation and subsequent price hikes, an Egyptian legislator, senior parliamentary member and economic committee member told Xinhua in a recent interview.
"Price hikes in Egypt are attributed to the economic reform program that led to the inflation, which the government was unable to contain," said Medhat al-Sherif, undersecretary of the economic committee in Egypt's House of Representatives.
An official report on Tuesday stated that Egypt's annual inflation rate rose up to 23.27 percent in December 2016 compared with 19.43 percent in November 2016.
The report stated that food and beverage prices consequently rose by 29.3 percent in December 2016 compared with 15.2 percent in December 2015.
The substantial inflation rate is the highest since 2008, and it developed over the past couple of months following the Central Bank of Egypt (CBE)'s decision to float the Egyptian pound in November in order to increase foreign currency.
The official exchange rate of the U.S. dollar then rose from less than 9 Egyptian pounds to over 18 pounds currently, causing prices to soar.
"Floating the currency is not the only reason behind price hikes, but also includes value-added tax (VAT), rising fuel prices in addition to subsidy cuts since 2014," Sherif told Xinhua.
The recent decision to float the pound was part of a strict economic reform plan including austerity measures and energy subsidy cuts encouraged by the International Monetary Fund (IMF), which rewarded Egypt in November with 2.75 U.S. billion dollars as a first batch of the 12 billion dollar loan for Egypt to finance its reform program.
"We need time intervals between economic reform decisions until markets settle with stable commodity prices, which the government could not adequately control," said the senior legislator, noting his parliamentary economic body rejected increasing the price of diesel since it directly affects citizens with lower-incomes, "but the government did not respond."
Egypt has been suffering from an economic recession in the past few years of political instability and relevant security issues causing a decline in tourism, foreign currency reserves and foreign investments.
The country's annual exports are around 25 billion dollars while its imports are around 77 billion dollars.
Economists believe that exports need to range between 140 to 150 billion dollars in order to reach a healthy trade balance.
Sherif urged developing industrial and agricultural production to increase exports, limiting imports and reducing the general budget deficit which the finance ministry expects to reach 319.5 billion pounds (about 17.1 billion dollars) in the fiscal year 2016/2017.
Egypt's fiscal year is from early July to end of June.
"The parliament's economic committee has recently summoned the ministers of agriculture, supplies and irrigation to plan a clear five-year strategy for food security," said the parliamentarian, noting that if successful it would save Egypt significant food import bills.
Following the 2011 popular uprising which removed former President Hosni Mubarak from power, Egypt's foreign currency reserves declined from 36 billion dollars to 13.5 in early 2013, and gradually rose to 24.265 billion by December 2016.
In a report in January, the CBE said that Egypt's total foreign debt increased by about 4.4 billion dollars, hitting 60.2 billion by September 2016.
The figure represents about 16.3 percent of the country's gross domestic product (GDP), compared to 55.8 billion in June 2016 and 46.1 billion in the first quarter of the 2015/2016 fiscal year.
Additionally, total domestic debt rose in September 2016 reaching 2.758 trillion pounds (about 154.4 billion dollars).
"This is an alarming indicator indeed," Sherif told Xinhua, urging the government to issue a detailed statement of its received loans, their installments, interest rates and services until 2030.