The political troubles in Egypt would be daunting even in a situation of economic growth and financial stability. But the current data suggest there is far more trouble ahead.
Egypt’s currency has fallen again in value, to 6.720 to the dollar in an auction this week. The Egyptian pound has lost 8 percent of its value already this year. In January, Egypt’s reserves dropped to a 15-year low of $13.6 billion dollars. As the Financial Times pointed out, “Reserves have fallen by $23bn in the two years since the start of the Egyptian revolution.” Because Egypt is a large importer of food and petroleum, the lack of foreign currency reserves is a great problem. The FT continues: “the Egyptian government’s hopes are pinned on securing a long-awaited $4.8bn loan from the IMF, who are due to visit Egypt again in the coming weeks. The problems remain the same: the IMF want unpopular reforms; the government is struggling to restore order on the streets. A swift conclusion to the deal is far from guaranteed.” Read more »