Egypt Strives to Maintain Economic Stability Amid High Inflation, Currency Devaluation
In the past year, the Egyptian government has been striving to curb soaring inflation caused by rising food and energy prices as a result of the Russia-Ukraine conflict and lingering COVID-19 pandemic.
As the most populous Arab country and one of the world’s largest importers of wheat, Egypt’s economy has been particularly overshadowed by soaring global commodity prices since the conflict’s breakout in February 2022.
Under pressure, Egypt decided in October to sharply devalue its currency the Egyptian pound, sending the annual urban consumer inflation rate surging to 18.7 percent in November from 16.2 percent in October, marking a near-five-year high.
DOLLAR SHORTAGE
“The situation is difficult for Egypt, but it’s also difficult worldwide,” said Rashad Abdo, an Egyptian economist, citing recent protests in some European counties due to high inflation and increasing cost of living.
Moreover, the Egyptian financial market suffered from a shortage of hard currency that led to the decline in the local currency’s exchange rate against the U.S. dollar. Rampant inflation in Egypt came after two sharp devaluations of the Egyptian pound against the U.S. dollar this year, the latest of which was on October 27 when the Central Bank of Egypt (CBE) lowered the value of the pound by about 14.5 percent.
To contain soaring inflation, the CBE announced on December 22 to raise the interest rate by 300 basis points.
“There are problems, but the government is working hard to address them,” Abdo told Xinhua, noting that the Egyptian government is taking measures to intervene in commodity prices on the market and expand the social safety network. -