2011-2020: The Egyptian economy – All eyes on the dollar

  • Date: 29-Dec-2020
  • Source: Ahram
  • Sector:Economy
  • Country:Egypt
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2011-2020: The Egyptian economy – All eyes on the dollar

The value of the Egyptian pound against the US dollar has always been a sensitive issue for all Egyptians, as it defines how much their savings are worth and is a key indicator of price direction.



Over the last 10 years, the pound has gone from being artificially supported to being floated, losing half of its value overnight. While the move was shocking at the time, it was seen as one of the factors that have helped the Egyptian economy to withstand major shocks like the emerging markets crisis in 2018 and this year's fallout from the Covid-19 pandemic.



The decision to float the pound in November 2016 as part of an International Monetary Fund (IMF)-backed package of reforms was much-needed to tackle a build-up of significant imbalances including a widening budget deficit.



Egypt's overall budget deficit stood at 12.5 per cent of GDP in fiscal year 2015-16, according to Ministry of Finance data. That deficit fell to 10.9 per cent in fiscal year 2016-17. The reforms included the gradual lifting of fuel subsidies and an increase in the value-added tax (VAT).



Christine Kamel, an economist at Dcode Economic and Financial Consulting, described the