A-Sisi under pressure: the Egyptian pound crashes
| Shahar Kleiman, Israel Hayom |
Tension in Cairo: today (Wednesday) fell to a new low against the dollar after the International Monetary Fund announced that the authorities are showing a commitment to a flexible exchange rate. The currency weakened by 7.3% and during the afternoon traded at a value of only 29.85 pounds to one dollar.
In the last year, the currency has already experienced three decreases in its value. Yesterday, the International Monetary Fund published the details of Egypt’s rescue package, which is estimated at 3 billion dollars. In the announcement it was emphasized that Cairo is moving towards a flexible policy in the foreign currency exchange trade and any intervention by the central bank will be guided by the need to avoid market volatility. However, the International Monetary Fund warned that the central bank may face political and social pressure to change policy.
At the same time, the “Financial Times” website reported that Egypt pledged to reduce the role of the military in its economy as part of the International Monetary Fund’s bailout program. According to the report, Egypt committed to the step in the shadow of the economic crisis, which is manifested in the lack of foreign currency, the weakening of the pound and high inflation.
The fund stated that structural reforms are critical to Cairo, and include adjustments between the public and private sectors. On the other hand, Egyptian President Abdel Fattah al-Sisi – a retired general himself – sees the army as the main tool for restoring the local economy, which collapsed during the Arab Spring protests of 2011. This is what ousted Egyptian President Hosni Mubarak from power. Since al-Sisi came to power at the expense of the Muslim Brotherhood, the role of the military in the Egyptian economy, which in any case was particularly significant, has deepened.
The consequences of the Corona epidemic and the war in Ukraine on the international economy have hit the Egyptian economy, among other things due to a jump in the prices of flour and bread, which tens of millions of Egyptians consume.
Al-Sisi, for his part, does not deny the economic crisis. However, he attributes it mainly to international circumstances and not to the structure of the economy. In a speech delivered this week, al-Sisi referred to the difficulties in the Egyptian economy:
“Can we stand firm in the face of every challenge? Will Egypt give up when the circumstances are difficult? Will the people of Egypt give up on it? Have we entered into wars and adventures where we have wasted Egypt’s money?”
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