Egypt targets inflation rate of less than 10% by 2025
The Egyptian government has set a target to achieve an inflation rate below 10% in 2025, as Prime Minister Mostafa Madbouly announced in a press conference on January 3rd. Madbouly expressed confidence that Egypt would recover from the successive crises it faced between 2024 and 2025.
The ongoing economic reforms in Egypt aim to enhance the economy's resilience to global shocks, with the government allocating EGP 342 billion (~$11 billion) from the public treasury to subsidize five commodities and services. This marks a significant increase from the EGP 100 billion allocated two years ago.
Madbouly acknowledged the challenges faced by Egyptian citizens and emphasized that considering the difficulty of the current situation, the government has decided to implement a gradual increase in electricity bills over five years.
Egypt has been facing significant economic challenges since early 2022, leading to increased pressure on its citizens. The issues include soaring prices, an unresolved foreign currency crunch, and delays in implementing crucial reforms. The country's substantial foreign debt, accrued through extensive borrowing abroad, has contributed to a shortage of hard currency needed for essential imports. In December 2022, Egypt signed a $3 billion financial support package with the IMF. However, disbursements from this package were halted as Egypt fell behind on commitments to adopt a flexible exchange rate and reduce the state and military's dominant role in the economy. The Egyptian pound has weakened further, reaching about 50 pounds to the dollar on the black market, compared to the official rate of 31 pounds. This depreciation exacerbates economic challenges for the country. Debt repayments due in 2024 are at an all-time high, standing at least $42.26 billion. This presents a complex and challenging economic environment for Egypt.