Yearender 2022: What are the four major economic challenges Egypt will face in 2023?

Ahram Online explains below the four significant challenges the Egyptian economy will face in 2023, covering the end of the current FY2022/2023 and the start of FY2023/2024.

It is worth noting that all procedures and measures Egypt has started to adopt since October, including its planning for FY2023/2024, come in line with the country’s new loan deal with the International Monetary Fund (IMF) under its Extended Fund Facility that allows Egypt to secure $3 billion over 46 months.

The US dollar shortage

Since the onset of the Russian war in Ukraine, a total of around $25 billion of foreign indirect investments, mainly centred on local debt instruments (hot money), have fled the domestic market, causing a significant shortage of the US dollar on the market liquidity level as well as in the country’s international reserves.

This challenge has affected Egypt’s imports, much of which are currently held up in ports due to the lack of dollars required to release them. This has led to a shortage of basic goods in the domestic market.

The currency shortage has also driven the US dollar prices in the parallel market, which had increased significantly to above EGP 30. During December, this rate fell to around EGP 28 but has started to rise again.

The government will have to deal with this grand challenge to keep the stability of the local market and help traders release their shipments.