During the last period, the national economy was subjected to two crises, which resulted in the decline of economic activities and employment, and the interruption of supply chains, the COVID-19 pandemic and the Russian-Ukrainian war. They also led to a shortage of goods and an increase in inflation rates.
As a result of the continued impact of these crises, the Egyptian economy awaits a set of changes and challenges during 2023, which require the integration of financial, monetary, and trade policies, and the development of a clear road map and well-studied solutions with results by decision makers.
• Managing the volume of external debt, which represents a great pressure on foreign exchange resources.
• The size of the domestic debt, the budget deficit, and the limited effectiveness of fiscal policies.
• Dealing with structural imbalances in the economy.
• Continued inflationary pressures as a result of the gradual rise in energy prices during the year.
• Adopting a flexible exchange rate policy in light of inflationary pressures and the need to raise the interest rate to achieve positive interest rates for deposit holders.
• The need to develop the productive structure and increase exports to deal with the balance of payments deficit.
• Restoring tourism to its normal levels after a relatively long period of limited number of tourists and its insufficient development.
Although 2023 is expected to be a difficult year, the government is expected to deal with these challenges seriously. This will be done by paying attention to industry and tourism, increasing exports and sources of foreign currency income, which will lead to the stability of the exchange rate of the Egyptian pound against the US dollar between EGP 25 and EGP 28 per dollar.
The government’s IPOs programme will enhance this stability, attract direct foreign investment, and increase the number of tourists. This year will witness the opening of the Grand Egyptian Museum and the state will take serious steps to complete the Trail of the Holy Family and improve the services provided to tourists in various places.
It is expected that interest rates will be raised in the first half of the year by about 3%, and then they will begin to decrease successively in the second half of the year.
The situation requires effective integration of various economic policies, and not leaving the Central Bank of Egypt and its monetary policies to work alone. We must also move quickly to deal with these challenges and provide incentives to attract foreign direct investments as soon as possible, as well as thinking about integrating Egyptians abroad as investors in the national economy. This can be done by establishing investment funds that achieve acceptable returns for them, as well as reducing taxes associated with the industrial process and investing in the Egyptian Exchange.
Dr Zakaria Salah – A banking expert