Egypt’s central bank announced that the pound saw another decline on Monday, hitting more than 30 pounds for every dollar as Egypt struggles with financial difficulties, rising inflation and a shortage of foreign exchange.
The historic sale price cut set by Egypt’s central bank is the latest in a series of cuts following a $3 billion IMF bailout package approved in mid-December.
It was decided to negotiate with the fund in exchange for the authorities to carry out a number of economic reforms, including the transition to a flexible exchange rate.
The agreement also allows for possible additional funding from the $14 billion fund for Egypt.
Earlier this month, a number of banks in Egypt traded the dollar for 30 pounds.
The Egyptian economy has been hit hard by years of austerity, the coronavirus pandemic and the aftermath of the war in Ukraine.
Egypt is the world’s largest importer of wheat, with most of its imports coming from Eastern Europe.
Since January 2022, the Egyptian pound has lost about 50% of its value against the dollar.
In recent months, the country has suffered from skyrocketing inflation and prices. According to monthly statistics released by the Central Agency for Public Mobilization and Statistics earlier this month, annual inflation reached 21.9% in December last year, compared to 19.2% in November. In December 2021, the annual inflation rate was 6.5%.
The central bank said food prices rose by an average of 4% in December 2022.
About a third of Egypt’s population of 104 million live below the poverty line, according to government statistics.
Most Egyptians depend on government subsidies to be able to buy basic goods such as bread, a policy that has been in place for decades.
Egypt also suffers from a shortage of foreign exchange. In an effort to maintain their foreign exchange reserves, many banks have introduced restrictions on foreign currency cash withdrawals.
The Egyptian government has also announced the postponement of many projects that require large amounts of foreign exchange.
Source: a. B
