The Impact of the Exchange Rate on the Resources Allocation, Individual Welfare, and Government Revenues: A Case Study of Cereal Crops أثر سعر الصرف على منطقة الموارد ورفاهیة الأفراد وعوائد الحکومة :دراسة حالة محاصیل الحبوب

Abstract

The Central Bank’s decision in November 2016 was liberalizing the exchange rate for the Egyptian pound which had an impact on the agricultural sector in general and cereal crops in particular, The research problem was increasing the prices of agricultural products, whether they were local or imports due to the increase in energy prices and the increase in the electricity tariff as a result of the increase in the exchange rate. The research aimed to estimate the effect of changes in the exchange rate on the government returns, the resource allocation and welfare (producer and consumer surplus) and net social loss, The following results were reached: (1) The net economic loss as a result of exporting the rice crop was the lowest of about 2.2 billion pounds in 2014, and the maximum amounted to about 44.6 billion pounds in 2016 due to the significant decrease in government revenues in 2016, which amounted to about 48.2 billion pounds. (2) The values of the index of net economic gains in wheat consumption achieved significant increases during the study period, ranging from about 202.1 million pounds in 2014 to about 241 million pounds in 2016 due to the increase in local prices, local consumption and the exchange rate. (3) The loss in the foreign exchange of the maize crop achieved negative values during the years 2014, 2015 and 2016 due to the decrease in the export of corn abroad, where the maximum decrease reached about 253.5 million dollars in 2014.