EGYPT: IMF AND GULF FUNDS ACT AS LAST BUFFER AGAINST WORSENING EXTERNAL ACCOUNTS

   Thu, 01 September 2022

Egypt’s financial reserves are being depleted very rapidly, even while the country’s oil and gas sector is booming because of high oil and natural gas prices. The current account deficit has continued to grow largely due to higher import bills and a slower recovery in the tourism sector. An IMF programme, along with other multilateral funding, is now critical to allow Egypt to cover its external financing needs. In the meantime, pressure on the reserves is expected to intensify, and the currency is expected to further weaken causing inflationary stress. Despite the worsening economic conditions in Egypt, widespread unrest is currently unlikely, given the military-backed government’s firm grip on security structures and the administration’s plans to increase social spending to ease the impact of the crisis.

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