Raising interest rates will have widespread negative repercussions, and reap few benefits

Raising interest rates will have widespread negative repercussions, and reap few benefits, Mohamed Ali Ibrahim writes in a column penned for Al Masry Al Youm. In addition to bringing investment to a grinding halt due to the high cost of borrowing, high rates will significantly increase the state’s debt service burden, he points out. He also says that while interest rate hikes are theoretically useful in situations where citizens spend much of their cash on goods and services, the theory does not apply to Egypt, where people have simply been forced to spend more on goods as their prices have increased, not because of a jump in purchasing power. Ibrahim rails against the government and its policymakers, saying their decisions seem to be based on a survey of a select segment of society and economic indicators that do not show the whole picture. He says that to point to the minority that is still able to purchase expensive homes in gated communities is to ignore how the population at large is faring.