The Egyptian economy has continued to plummet in the wake of Al-Aqsa Flood
(Photo Credit: AFP)
The International Monetary Fund (IMF) is reportedly “seriously considering” increasing its loans to Egypt due to its deep economic crisis, Reuters reported on 17 November.
IMF Managing Director Kristalina Georgieva told Reuters on the sidelines of the Asia Pacific Economic Cooperation Summit in San Francisco that the organization might have to augment the load due to economic devastation caused by the war between Palestinian resistance factions and Israel.
“The conflict is devastating Gaza’s population and economy and has severe impacts on the West Bank’s economy and is also posing difficulties for neighboring countries Egypt, Lebanon, and Jordan through the loss of tourism and higher energy costs,” Georgieva told Reuters.
The state of Egypt’s economy took a heavy dip due to the Russia-Ukraine war; the crisis snowballed in 2022 and began to spiral at the beginning of 2023, with the exchange rate being 35-40 Egyptian pounds to the dollar at the start of the year before staying relatively stable at 32 around March.
According to Canada-based XE.com, Egypt’s currency has taken a 49.06 percent dip since January 2022. The currency devaluation caused a spike in inflation – a jump from 25.8 percent in January to 31.9 percent in February year on year. Food prices rose 61.8 percent year on year.
Egypt requested a $12 billion loan from the IMF in 2022, but could not meet the conditions required. It then settled for an offer of $3 billion in October 2022 over a 46-month period.
The loan program that Cairo accepted includes “policies to unleash private sector growth including by reducing the state footprint, adopting a more robust competition framework, enhancing transparency, and ensuring improved trade facilitation.”
Pressure has recently been put on Egypt to take in displaced Gazans as part of Israel’s attempt to ethnically cleanse the Gaza Strip.
Israeli newspaper Ynet reported on 31 October that “Israel is trying to pressure Egyptian President Abdel Fattah al-Sisi to take in refugees from the Gaza Strip – and has made a new proposal: the World Bank will write off Egypt’s large financial debt, in return for such a step on their part.”
Israel has been trying to empty Gaza in an attempt to eradicate Hamas, which it has so far not been able to achieve.
Egypt has refused, with President Abdel Fattah al-Sisi saying, “What is happening now in Gaza is an attempt to force citizens to take shelter and immigrate to Egypt – and we will not accept that.”
“Egypt opposes any attempt to resolve the Palestinian issue through military means or through the forced displacement of Palestinians from their land – whatever will be at the expense of the countries of the region.”