Egypt’s Financing Needs Increase to $9 Billion per Month
Egypt’s financing needs have risen to $9 billion per month this year, compared to $6.5 billion per month last year. This increase is attributed to the pressure of the high import bill and the rise in the prices of basic materials, according to Egyptian Minister of Finance, Mohamed Maait.
Confidence in Egypt’s Ability to Fulfill Obligations
Economist Ali Metwally expressed a high level of confidence in Egypt’s ability to fulfill its multiple obligations, including external debt and providing the necessary dollar flows for goods to enter Egyptian ports. Metwally also predicted an increase in export sales, improvement in tourism revenues, and proceeds from the sale of state-owned companies, which will help Egypt meet its financial obligations.
The Exchange Rate Dilemma
Regarding the exchange rate of the Egyptian pound against the US dollar, Metwally discussed the decision to keep the exchange rate at the current level. He stated that from the perspective of social stability, maintaining the current exchange rate is the best decision. However, from an economic stability standpoint, it may not be the optimal choice. Some foreign investors and companies transfer their dollar liquidity in the parallel market or wait for the official rate to reflect external pressures on the balance of payments. Metwally believes that applying a flexible exchange rate at the present time would have a weak effect on Egypt’s agreement with the IMF, as meeting certain conditions, such as the sale of government companies, has proven challenging.
Expectations for the Future
Metwally expects public offerings to resume in the third quarter after a temporary halt due to valuation differences. He also expressed hope that the International Monetary Fund (IMF) will take into account Egypt’s complex social situation and not make the permanent transition to a flexible exchange rate a critical requirement for the second tranche of the loan. Metwally emphasized that canceling the agreement with the IMF is unlikely, as there has been continuous coordination with the Fund since last year.
Overall, Egypt faces increasing financing needs, but experts remain optimistic about the country’s ability to meet its obligations. The exchange rate dilemma poses challenges, with considerations of both social and economic stability. The future holds expectations of resumed public offerings and ongoing coordination with the IMF.
