Egypt undergoes painful adjustments in response to deepening economic crisis
The Egyptian government is pursuing broad measures to stabilize the economy as the Arab state grapples with a foreign currency crisis, a weakening pound and rising inflation, Reuters reports. Even as a falling dollar offers a refuge for many emerging markets, Egyptian inflation has marched on, hitting 19% in November, and is expected to reach 25% by March.
The pound fell nearly 7% against the US dollar on Wednesday, marking the third time since last March that the central bank has allowed a significant one-day drop. The fall has pushed the cost of one dollar to 27 Egyptian pounds, compared with around 16 pounds a year ago.
The government has begun taking once unthinkable steps such as privatizing military-owned enterprises, cutting food subsidies and reducing government spending. Meanwhile, the foreign exchange shortage has led the government to pause some projects heavily reliant on foreign currencies.
