Egyptian Inflation Reaches Highest Level in 5Y, IMF Expects a Decline After 2Y

Egyptian Inflation Reaches Highest Level in 5Y, IMF Expects a Decline After 2Y

Egypt's annual urban consumer inflation rose sharply in December to 21.3 percent, its highest level in five years, according to Central Agency for Public Mobilization and Statistics (CAPMAS).

The inflation rate in December was the highest since 2017 when it reached 21.9 percent.

The rise from 18.7 percent in November followed a currency devaluation in October and restrictions on imports.

However, the International Monetary Fund (IMF) expected the inflation to ease to around seven percent by the fiscal year 2024-25.

During a virtual press conference, IMF Assistant Director and Mission Chief for Egypt, Middle East, and Central Asia Department Ivanna Vladkova Hollar estimated a financing gap of about $17 billion over the next four years.

The government directed its ministries to cut unnecessary spending until the end of next June, as it is trying to cope with high inflation and constant pressures on its currency.

The decision, dated Jan. 4 and published in the official gazette this week, includes the postponement of any new national project heavily reliant on foreign currency and requires ministries to seek finance ministry approval on foreign currency expenditure.

The health, interior, foreign, and defense ministries are exempted, as well as agencies tasked with expenditure on subsidized food products and energy.

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