The Clap
Egypt is seeking to support its currency and economy in the face of economic instability However, the recent steps taken have led to shortages in numerous commodities in the market.
Egyptian Economy faces a Wave of Problems
Following the Russia-Ukraine conflict, Egypt was one of the developing countries that faced fluctuations in the prices of commodities. This led to increased pressure on inflation levels and market instability. This also pushed down the value of the EGP/USD exchange rate to EGP 19 per dollar.
In May 2022, the government stated that the value of the foreign investment that exited the local debt market reached $20 billion.
Government Efforts
The Egyptian government obliged importing companies to obtain documentary credit from banks, to be allowed to import. The government also reduced the amount of USD that individuals can buy from banks.
In addition to that, the government is negotiating a deal with the IMF to support Egypt. It is expected that this deal will be worth less than $15 billion. Egypt is also receiving support from GCC countries through investments and deposits.
Obstacles and Shortages
The obligation of importers to receive documentary credit from banks has led to the disappearance of numerous goods from the market, even though the obligation excluded some food products. The process of importing has become more complicated and costly for businesses.
These obstacles have led to the disappearance of goods from the market, most notably clothing and cars. For that reason, President El-Sisi excluded raw materials and production needs from the obligations.
The government is also waiting for the IMF’s decision which will have requirements and modifications regarding the currency, not to mention the structural developments they have mentioned previously.
Shortages as government cushions the economy 💎
