Dollar prices in Egypt recorded severe fluctuations today, Sunday, in light of market instability and Standard & Poor’s announcement of reducing Egypt’s long-term credit rating.
The price of the black market dollar jumps to 45 pounds:
The price of the dollar on the black market reached its highest level of 45 pounds, its highest level ever, despite the Central Bank’s attempts to ease the pressure on the pound against the dollar by increasing the use of direct debit cards outside the country.
The report’s expectations that the Egyptian economy will slow down to record 3.9% at the end of the current fiscal year 2023/2024 also put pressure on the price of the dollar on the black market.
The price of the dollar rose on the black market with – the international rating agency Standard & Poor’s announced on Friday the long-term sovereign rating of Egypt to “B-” from “B”, indicating increasing financing pressures on the country, and repeated delays in implementing monetary and structural reforms in the country. , among other factors that led to the reduction.
Experts told that it will decrease to 37.06 pounds by the end of 2024, and to 39.02 by the end of 2025.
Achieving further reforms:
Dr. Mohamed Maait, Minister of Finance, confirmed that we are working to achieve more structural reforms and measures during the coming period. To deal with the internal and external economic challenges, especially those mentioned in the Standard & Poor’s report, which decided to reduce Egypt’s sovereign credit rating in local and foreign currencies from “B” to “B-” with a stable outlook in the long term, and to fix the sovereign credit rating at The short term is at “B”.
The minister added that Standard & Poor’s, despite the difficulties that the Egyptian economy is still facing, as a result of the global inflationary wave, resulting from geopolitical tensions, and its downgrading of the rating in the long term, based its recent decision to change the future outlook from negative to stable, and also to stabilize the rating. “Short-term”, given the important structural reforms that the Egyptian government was able to undertake recently that contributed to achieving financial discipline, explaining that we succeeded, during the fiscal year 2022/2023, in dealing in a balanced manner with all the current variables and challenges on the global and internal arenas, including a rise in rates. Inflation, interest rates, and a decline in the value of the local currency against the dollar. A primary surplus of 1.63% of the domestic product was achieved compared to a primary surplus of 1.3% of the domestic product in the fiscal year 2021/2022. The total budget deficit reached 6% of the domestic product compared to 6. 1% during the fiscal year 2021/2022.
The Minister indicated that a strong growth in tax revenues by 27.5% had been achieved as a result of mechanization efforts, improving tax administration, and combating tax evasion and avoidance. Standard & Poor’s expected financial discipline to continue to be achieved by continuing to implement procedures to mechanize the tax system, in addition to efforts The government will rationalize expenditures during the fiscal year 2023/2024, ensuring the achievement of an initial surplus of 2.5% of the domestic product.
The Minister confirmed that legal amendments have been approved that allow the cancellation of tax and customs exemptions on economic and investment activities of state-owned entities and companies, which leads to enhancing fair competition in the Egyptian market, within the framework of the state’s efforts to empower the private sector.
The minister indicated that state exit deals worth $2.5 billion were implemented within the “offerings” program during the first quarter of the current fiscal year, which helps increase foreign exchange flows and provides a portion of the foreign financing required to cover the needs of the Egyptian economy, in addition to continuing… Achieving a primary surplus and growing tax revenues, explaining that Standard & Poor’s expected the government to continue implementing more reform measures during the coming period within the economic reform program.
The minister added that Standard & Poor’s explained in the context of its report that it may raise Egypt’s sovereign rating if the ability to attract more foreign currency flows to the Egyptian economy is increased as additional resources, which can be achieved by accelerating the “offerings” program during the coming period. ; This enhances the ability of the Egyptian state to cover its financing and external needs during the next two years, and also contributes to reducing the need for external financing, and thus reducing the debt service bill, in a way that helps increase the confidence of investors and institutions in the ability of the Egyptian economy to deal with external challenges, explaining The continued fiscal discipline and ability to pay tax revenue growth rates were praised by Standard & Poor’s experts.
Ahmed Kjouk, Deputy Minister for Financial Policies and Institutional Development, confirmed that we are working to advance efforts to enhance the role of the private sector and increase its contributions to economic activity by implementing the measures and structural reforms required to improve the business environment, increase competition, and enhance competitive neutrality in the Egyptian market. In order to achieve strong and sustainable growth rates driven mainly by the private sector, he pointed out the combined efforts of all state agencies to encourage and attract private sector investments, including foreign direct investments, and to push the export sector and productive activities.
