Egyptian Economy Awaits Dollar Inflows after Currency Liberalization

People look at traditional decorative Ramadan lanterns called "Fanous" displayed for sale at stalls, ahead of the holy month of Ramadan at Sayyidah Zaynab district in Cairo, Egypt March 10, 2024. (Reuters)
People look at traditional decorative Ramadan lanterns called "Fanous" displayed for sale at stalls, ahead of the holy month of Ramadan at Sayyidah Zaynab district in Cairo, Egypt March 10, 2024. (Reuters)
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Egyptian Economy Awaits Dollar Inflows after Currency Liberalization

People look at traditional decorative Ramadan lanterns called "Fanous" displayed for sale at stalls, ahead of the holy month of Ramadan at Sayyidah Zaynab district in Cairo, Egypt March 10, 2024. (Reuters)
People look at traditional decorative Ramadan lanterns called "Fanous" displayed for sale at stalls, ahead of the holy month of Ramadan at Sayyidah Zaynab district in Cairo, Egypt March 10, 2024. (Reuters)

The Egyptian Central Bank’s move to liberalize the exchange rate of the local currency against the US dollar and raise interest rates by 6 percent is expected to have both positive and negative effects on the country’s economy, according to experts.

A positive result is represented by the anticipated dollar flows into the Egyptian market, as experts pointed to the importance of good management to achieve the utmost benefit for the overall economy.

On the other hand, the high inflation rate caused by the currency devaluation is one of the main negative repercussions of the new decision.

Egypt is likely to receive financing amounting to $3 billion from the World Bank, as part of a financing package from the International Monetary Fund (IMF) with an expected value of $20 billion, according to Finance Minister Mohamed Maait.

Cairo and the IMF had agreed to increase the value of the financing program to $8 billion from $3 billion, in addition to about $1 to $1.2 billion from the Fund’s sustainability program.

Last week, the Central Bank announced that it would raise interest rates by 600 basis points and allow the exchange rate to fluctuate according to market mechanisms, bringing the dollar exchange rate to an average of 49.5 pounds in commercial banks after it had stabilized at 30.9 pounds for nearly a year.

Maait said goods worth $13 billion have been released since the first of January until now.

The demand for the dollar is expected to continue until the release of goods seized at Egyptian customs and ports, which some estimated at about $8 billion.

As the economy awaits positive indicators to push it towards sustainable growth, inflation rates last February were higher than expectations, as they jumped to 35.7 percent, ending a series of declines that began in October, driven mainly by the rise in food prices.

Data from the Central Agency for Public Mobilization and Statistics on Sunday attributed the increase to “a rise in the prices of the meat and poultry by 25 percent, cereals and bread by 14.2 percent, fish and seafood by 11.5 percent, and dairy, cheese and eggs by 12.8%, in addition to oils by 14.1%...”

Risk analyst at Nile Financial Leasing Company Zaher Khalif expected the inflation rate to continue to rise during the coming period as a result of the devaluation of the pound.



France Signs Deals to Help Egypt’s Economy in Volatile Regional Climate

 Egypt's President Abdel Fattah al-Sisi (R) and French President Emmanuel Macron (L) attend the Egypt-France Business Forum, in Cairo, on April 7, 2025. (AFP)
Egypt's President Abdel Fattah al-Sisi (R) and French President Emmanuel Macron (L) attend the Egypt-France Business Forum, in Cairo, on April 7, 2025. (AFP)
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France Signs Deals to Help Egypt’s Economy in Volatile Regional Climate

 Egypt's President Abdel Fattah al-Sisi (R) and French President Emmanuel Macron (L) attend the Egypt-France Business Forum, in Cairo, on April 7, 2025. (AFP)
Egypt's President Abdel Fattah al-Sisi (R) and French President Emmanuel Macron (L) attend the Egypt-France Business Forum, in Cairo, on April 7, 2025. (AFP)

France and Egypt signed strategic partnership agreements on Monday, in areas covering health, transport and energy, which French President Emmanuel Macron said would help shore up Egypt's stability amid volatility in the region.

"Egypt is a strategic partner for our country," said Macron, speaking alongside Egypt's President Abdel Fattah al-Sisi at a news conference in Cairo.

"I would thus like to reaffirm France's commitment to ensuring the stability of Egypt given the context of a worsening climate in the region and as the Egyptian economy faces challenges," added Macron.

Macron said he continued to back talks between Egypt and the International Monetary Fund and the European Commission.

The IMF approved last month the disbursement of $1.2 billion to Egypt, which has been grappling with high inflation and shortages of foreign currency.

Macron added France's overseas aid development body would sign 260 million euros ($284.5 million) worth of loans and grants for Egypt in areas such as transport, health, water and energy.

Macron and Sisi also both reaffirmed their calls for a ceasefire to the fighting in Gaza and for the release of Israeli hostages.