Global inflation raises Egypt’s import bill by $4 bln monthly: Finance minister

Doaa A.Moneim , Monday 20 May 2024

The global inflationary wave has raised Egypt's import bill by $4 billion per month due to the rise in global prices, increased shipping costs, and exchange rate fluctuations, Minister of Finance Mohamed Maait stated on Monday.

 Global, regional
Minister Maait speaks at the event at Cairo University. Courtesy of the finance ministry


Maait made his statements during a discussion session titled "Policymaking in Times of Increasing Risks and Uncertainty. The session, part of the annual scientific conference of the cabinet’s Information and Decision Support Centre, was held in cooperation with the Faculty of Economics and Political Science, Cairo University.

The economic slowdown, decline in trade movement, and the restrictive policies adopted to deal with the inflationary effects of global crises negatively affect tax and non-tax revenues, Maait said.

He added that spending on support for petroleum resources has hiked to EGP 200 billion due to the increase in global prices, higher shipping costs, and exchange rate fluctuations.

Estimates suggest a 60 percent decline in Suez Canal revenues due to tension in the Red Sea, said Maait.

The International Monetary Fund has recently revealed that tension in the Red Sea, a repercussion of the Israeli war on Gaza, has resulted in the loss of 75 percent of Suez Canal revenues since the war broke out on 7 October.

“The largest portion of expenditures is allocated to 'necessities' such as salaries, pensions, subsidies, development, health, and education to meet citizens' needs and fulfil the state's obligations. This represents a challenge amid the exceptional circumstances facing the Egyptian economy," said Maait.

Public expenditures are increasing, considering the additional burdens borne by the state treasury due to the rise in financing costs resulting from higher interest rates and changes in the exchange rate, he noted.

The government is working to support agriculture, industry, and information technology to stimulate production and exports. In addition, it is committed to implementing initiatives that improve the business climate and attract more investment, Maait pointed out.

The state treasury continues to bear the difference in interest rates through an initiative that provides EGP 120 billion in financial facilities to support productive activities, he added.

"We have commenced a corrective phase to steer the Egyptian economy towards overcoming the severe negative impacts of external and internal challenges and to mitigate potential risks amid the escalating repercussions of the war in Ukraine, Gaza, and other signs of instability in the Middle East, including turmoil in the Red Sea region," the minister said.

He explained that the state's public finances are being managed under difficult circumstances. "We don't know where the global and regional crises are heading. Therefore, we are working with flexible, balanced, integrated, and consistent policies and are more cautious in the face of uncertainty and turbulent fluctuations."

He added: “We are betting on the private sector to unleash the capabilities of the Egyptian economy towards sustainable growth, in line with the increasing population growth and the consequent need to redouble efforts to meet people's needs in various development sectors."

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