According to the source, foreign currency inflows into the local market have jumped by about 200 percent, including more than a 100 percent rise in the remittances of Egyptians abroad compared to their level before the unification of the exchange rate.

On 6 March, the CBE devaluated the Egyptian pound against the US dollar, allowing the local currency to lose over 60 percent of its value against the greenback, the source noted.

This action aligns with Egypt’s commitment to the International Monetary Fund (IMF) to adopt a flexible regime for foreign exchange under the $8 billion loan programme.

The source also pointed out the latest progress in the CBE’s foreign reserves, which recorded an all-time high of $46.83 billion in June of 2024 indicating a $13.26 billion rise from August 2022 estimated at 253 percent growth.

According to the source, the current reserves cover approximately 7.9 months of Egypt’s commodity imports, surpassing the internationally known standards for safe levels.

This is mainly attributed to the agreements signed in 2024, including the largest foreign direct investment (FDI) deal in the history of Egypt in Ras El-Hekma, which pumped $35 billion into the economy.

In parallel, the IMF has expanded its loan deal with Egypt from $3 to $8 billion through 2026; it is worth noting that the IMF had recently rescheduled its executive board meeting to discuss Egypt’s Extended Fund Facility (EFF) loan programme to 29 July.

In addition, a $57 billion financial package was committed to Egypt via international financial institutions and development partners during the ongoing global and regional tensions.

Furthermore, the European Union (EU) committed 7.4 billion euros to Egypt in the Egypt-EU Investment Conference held on 29-30 June, in which the two parties signed an agreement that provided 1 billion euros out of the 7.4.

The source also explained that the upward trajectory of the foreign currency inflows eradicated the CBE’s foreign assets deficit to record a surplus of $10.3 billion in June compared to a deficit of $11.4 billion in January.

The source asserted that inflation rates were successfully controlled by the bold decisions taken since August 2022 to reach 27.5 percent, recording the lowest level since February 2023.

Since the Russian-Ukrainian war eruption in March 2022, the CBE has started tightening its monetary policy, hiking the key interest rates by 19 percent (1900 bps).

Role of new government

 

Prime Minister Mostafa Madbouly announced the new government program in July, stating that one of its goals is to rationalize public spending and decrease public debt.

Madbouly added that the new government intends to increase private investments to 60-65 percent of the total and raise the annual growth rate of FDIs to reach 14 percent by 2030 as stated in the State Ownership Policy Document.

Additionally, Egypt is committed to decreasing its debt to gross domestic product (GDP) to under 80 percent by 2027 with 50 percent of the initial public offering (IPO) programme directed towards decreasing the government’s debt.

This is evident in Egypt’s debt projections as Egypt expects to decrease debt-to-GDP ratio, reaching 82.6 percent of the GDP in 2025 down from 90 percent in 2024.

It is worth noting that Egypt’s debt-to-GDP ratio hit 98 percent in fiscal year (FY) 2022/2023, while the government targets to bring it down to about 88 percent in the current FY2024/2025, which started on 1 July, and to reach below 80 percent in FY2026/2027.

As for the short-term external debt, it reached its highest point in the first quarter of FY2023/2024 at a value of approximately $30.27 billion, according to the source.

The source also tackled external indicators showing a positive outcome in the yield curve of Egypt’s dollar-denominated bonds due in January 2027, exhibiting a decline from 22.86 percent in October 2023 to 9.2 percent in June 2024.