COVID’s Impact on Egypt’s Economy Explained

On Wednesday, Egypt finalized an extended $8 billion plan with the International Monetary Fund (IMF). It also declared its intention to permit the exchange rate to be dictated by market forces, a step aimed at fostering economic stability.

In the past two years, a severe dollar shortage has stifled imports, leading to port delays and adversely affecting local industries.  

The consequence has been a rapid increase in prices for essential foods, surpassing headline inflation, which soared to a record 38% in September. 

According to Reuters, economic growth has decelerated, and many Egyptians report a decline in their standard of living. The repayment burden on foreign debt has become burdensome, exacerbated by rising interest rates and a weakening currency, consuming more than 45% of total revenue in the fiscal year ending in June 2023.

This has significantly impacted Egyptians, with pre-COVID figures indicating around 30 percent in poverty. Analysts now estimate that about 60 percent of Egypt's 106 million citizens are below or near the poverty line.