Egypt has significantly tightened its monetary policy in response to an economic crisis, implementing measures outlined in an $8 billion International Monetary Fund (IMF) financial support package signed in March. While the program aims to stabilize the economy, it has also necessitated substantial price increases and a devaluation of the Egyptian pound.
The central bank has taken decisive action, raising interest rates by a cumulative 800 basis points in 2024, with a sharp 600 basis point hike in March alone. This aggressive monetary tightening is intended to curb inflation and stabilize the currency.
Concurrently, the government has adjusted prices for certain subsidized products to address a burgeoning budget deficit. The fiscal year ending on June 30 saw a deficit of 505 billion Egyptian pounds ($10.27 billion) against a total budget of 3.016 trillion pounds.
These policy measures, although painful in the short term, are considered essential steps towards macroeconomic stability and long-term economic growth. Egypt aims to restore investor confidence, attract foreign investment, and build a more resilient economy.
