Egypt’s president sounded a warning about the impact of rising prices stemming from currency devaluations, saying the nation of 105 million won’t be able to tolerate too many more hikes.
(Bloomberg) — Egypt’s president sounded a warning about the impact of rising prices stemming from currency devaluations, saying the nation of 105 million won’t be able to tolerate too many more hikes.
When the impact of the foreign-exchange rate is taking a toll on Egyptians’ lives, the government can’t ignore it, Abdel-Fattah El-Sisi said at a conference in Alexandria.
“We don’t sit in place. No, no, we can’t, even if this contradicts with…” Sisi said, stopping short of specifying who this may be at odds with. “Pay attention, or it will lead you into an unimaginable crisis,” he said.
Read: Egypt Hits Pause on Interest-Rate Hikes as Focus Turns to Pound
The president’s remarks are among his strongest yet about the crisis facing one of the world’s biggest importers of wheat. Egypt’s economy has been hit by the coronavirus pandemic and then by Russia’s invasion of Ukraine. Authorities have already devalued the currency three times since the start of last year, with backing from the International Monetary Fund, and analysts expect a fourth such move in the coming months.
Read also: Goldman Says Egypt Wants Asset Sales Before a Devaluation
The devaluation, and a pledge to move to a floating exchange rate, were made necessary by a dollar shortage after more than $20 billion in hot money exited the country in a matter of weeks last year. It’s sent prices soaring, with annual inflation climbing to over 32% in May — piling pressure on citizens of the Arab world’s most populous nation, 70 million of whom receive subsidized goods.
Egypt agreed a $3 billion IMF loan program, though the first review — which will be accompanied by disbursement of some of the cash — has yet to take place. The IMF has been pushing for progress on promised reforms including the sale of state-held companies.
In addition, billions of dollars pledged by Gulf Arab states have yet to arrive.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.