Egypt’s President Abdel Fattah El-Sisi pledged that economic conditions in the country would improve soon, defending a decision to liberalize the exchange rate despite his initial rejection of the move last year.
Speaking during the Martyr’s Day celebration in Cairo, Sisi said that liberalizing the exchange rate came “after providing the necessary amount for that.”
On Wednesday, the Egyptian Central Bank announced the liberalization of the exchange rate of the pound, allowing it to be determined according to market mechanisms. The value of the local currency fell to slightly less than 50 pounds to the dollar, after it had been stable for months at 30.85 pounds.
The president noted that around $45-50 billion in new financing have been injected through the multibillion-dollar Ras Al-Hekma development investment deal with the United Arab Emirates, an $8 billion loan agreement with the International Monetary Fund and agreements with the European Union.
In remarks to Asharq Al-Awsat, Egyptian economic expert Mustafa Badra said that the shortage of foreign currency has “difficult repercussions on the economy and on Egyptians,” noting that at the beginning of 2024, the country suffered from a severe scarcity of foreign currency, amid fears that the dollar exchange rate would reach one hundred pounds, which would have caused social panic and affected prices.”
Egypt has been suffering from a long-term shortage of hard currency that worsened in early 2022, which “slowed down economic activity and led to a deficit in imported goods. This coincided with the acceleration of the inflation rate until it reached record levels during the past year,” according to observers.
Sisi said that Egypt has been experiencing a major crisis, as a result of the Covid-19 pandemic, which lasted for two years, followed by the Russian-Ukrainian war, and then the war in Gaza that poses big threats and challenges to the country and the region.
“The previous circumstances and the pressure that Egyptians have endured over the past four years, which have increased in the last year with the rise in prices, require more effort, patience, and work in order to preserve and protect the country,” he remarked.
In the same context, Badra stressed that external challenges have complicated the situation in Egypt, stressing that it was not possible for the government to make decisions that would further exacerbate the economic situation.
He pointed to “the decline in Egypt’s dollar revenues from the Suez Canal and tourism due to the repercussions of the war in Gaza, which affected the regional environment as a whole.”
Revenues from the Egyptian Suez Canal declined by 50 percent at the beginning of 2024, according to official estimates, due to security tensions in the Red Sea, while the war in Gaza also affected inbound tourism.
