Complicated regional situation hurts Egypt’s crucial sectors, minister says

Egypt’s Finance Minister, Mohamed Maait, said taming inflation is the country’s biggest priority after the North African country received an $8 billion bailout from the International Monetary Fund.

Inflation in Egypt slowed to 33.3 per cent last month from 35.7 per cent in February, but this is still well above the Egyptian central bank’s long-term target of about 7 per cent.

Mr Maait is also hopeful that interest rates, which were raised by 600 basis points last month, will come down.

Raising interest rates and floating the Egyptian pound were two key demands Egypt had to meet for the IMF to increase its $3 billion loan to $8 billion.

The Egyptian pound plunged after the central bank’s decision to float its currency. It closed on Tuesday at 48.50 against the US dollar. During an event at the IMF headquarters in Washington, Mr Maait said the adjustments to Egypt’s monetary and fiscal policies must “be lasting”.

He said the government needs at least six months to assure the private sector and masses that “we are on the right track”. “The flexible exchange rate will continue to assure them that the private sector will lead, assure them that we will contain our public investment and also inflation, because the citizens have suffered greatly from that high inflation,” he said.

Egypt’s economy has faced many challenges over the years, including austerity, the Covid-19 pandemic, and the wars in Ukraine and Gaza.

Mr Maait said revenue from the Suez Canal, where trade has been disrupted because of the Yemeni Houthis’ attacks in the Red Sea, has dropped by 60 per cent.

Tourism, another major source revenue for the most populous Arab country, has also been harmed, he said.

“So, this is a whole situation in the Middle East is challenging, and is affecting Egypt negatively on some of the economic sector,” Mr Maait said.

The flexible exchange rate will assure people that we will contain our public investment and also inflation

MOHAMED MAAIT

Egypt’s Finance Minister