Egypt’s banks to help clear import backlog in 4 days, El-sisi says

EGYPT’S banks will help secure the necessary dollars to clear a backlog of imports within four days, President Abdel-fattah El-sisi said Monday. The remarks, during a televised event, offered potential end date for an overhang in commodities that’s helped fuel demand for the US currency on the black market.

Officials have been working to clear an import backlog estimated at over $5 billion in December—with goods building up at ports large due to a letter of credit requirement imposed earlier by the central bank but which authorities have vowed to lift soon.

The president’s comments come amid expectations of another devaluation in the pound following two earlier ones this year. The International Monetary Fund had repeatedly urged authorities to embrace greater flexibility in the exchange rate—a step that helped Egypt secure a $3 billion package from the Washington-based lender.

Prime Minister Mostafa Madbouly, speaking at the same event, said around $5 billion worth of commodities had been released from the ports between Dec. 1-23 and that another $9.5 billion in goods remain at the docks.

Egypt last week hiked interest rates by 300 basis points, the most since 2016, seeking to tackle surging inflation amid expectations of a further devaluation of the pound.

The Monetary Policy Committee raised the deposit rate to 16.25 percent and the lending rate to 17.25 percent, it said Thursday in a statement. Although the majority of economists in a Bloomberg survey had predicted an increase, none foresaw the magnitude.

The jumbo hike comes as Egypt faces its worst foreign-exchange crunch in half a decade and the fastest acceleration in inflation in almost five years. Authorities in the Middle East’s most populous country have devalued the local currency twice in 2022, most recently at the end of October, enacting sharp rate rises in both instances.

Hit hard by the economic shockwaves of Russia’s invasion of Ukraine, Egypt has sought crucial aid from allies in the Gulf and turned to the International Monetary Fund to help restore confidence in local assets. The IMF last week approved a $3 billion loan for Egypt, a deal that’s expected to unlock additional financing of about $14 billion from international and regional partners.