Measuring Transparency of the Central Bank of Egypt as a Prerequisite for Adopting Inflation Targeting Policy

Abstract

It is almost two decades since the CBE has firstly announced its intention to adopt the IT regime once the fundamental prerequisites are met (Central Bank of Egypt (CBE) 2005). The transition towards the IT policy has been part of the complete revamping and reform of monetary policy in Egypt post the various challenges that the Egyptian economy experienced since the late nineties (Al-Mashat 2008). Thus, the CBE has paid continuous attention to comply with the preconditions of the IT policy (Youssef 2007). The purpose of this paper is to assess the degree of transparency of the Central Bank of Egypt (CBE) over the period 2005 – 2021. The study relies on the most recently developed index for Central Bank Transparency (CBT) for inflation-targeting central banks (CBT-IT) designed by (Al-Mashat et al. 2018) to quantify the degree of transparency of the CBE. The analysis reveals that CBT in Egypt is advancing, but with a relatively reasonable path of change. Still, the CBE has a relatively large void to fill, especially pertaining to the transparency related to the Forecasting and Policy Analysis System (FPAS) and policy-making process.