Central Bank of Egypt (CBE) Governor Tarek Amer said yesterday there would be no devaluation of the EGP until reserves were higher, suggesting a level of USD25 billion in his comments to a late-night talk show. Reserves currently stand at USD16.5 billion, though the net foreign asset position of the CBE is much weaker. Amer argued that his monetary policy rested on encouraging economic development and stabilising prices, and said it would currently be relatively costly to devalue – in the sense that economic pain would be greater than potential attracted investments. He added that he expected companies would be able to access foreign exchange from next year, and that the CBE was looking to encourage capital flows. He explained his earlier comments about saving USD 20 billion from the import bill, saying that the actual import bill was USD90 billion last year rather than an actual USD76 billion, with the discrepancy explained by c20,000 traders falsifying their bills.   Amer’s comments support our view that CBE is trying to build a “liquidity shield” of foreign reserves before floating the currency. We reiterate our view that there will not be devaluation of official EGP against USD in the short term. Having said that, we note that an extended floatation process has already started with the CBE relaxing foreign currency deposit limits and ‘allowing’ the parallel market to function within limits. We, therefore, expect the market will be left with two prices for some time as authorities rationalise imports and hope for a recovery in FX inflows, including a potential lift of Russia’s travel ban to Egypt. (Television interview, Simon Kitchen, Mohamed Abu Basha)