Recently, the national economy has faced two crises leading to the decline in economic activity and employment, as well as the disruption of supply chains, the COVID-19 pandemic and the Russo-Ukrainian war. They also led to a shortage of goods and a rise in inflation rates.
As a result of the ongoing impact of these crises, the Egyptian economy is expected to face a series of changes and challenges in 2023, which will require the integration of fiscal, monetary and trade policies, as well as the development of a clear roadmap and well-studied solutions with outcomes from decision-makers.
challenges
• Management of the volume of foreign debt, which puts great pressure on foreign exchange resources.
• The level of domestic debt, the budget deficit and the limited effectiveness of fiscal policies.
• Dealing with structural imbalances in the economy.
• Persistent inflationary pressures as energy prices gradually increased throughout the year.
• Adoption of a flexible exchange rate policy in the face of inflationary pressures and the need to raise interest rates to achieve positive interest rates for deposit holders.
• The need to develop the production structure and increase exports to deal with the balance of payments deficit.
• Restoring normal levels of tourism after a relatively long period of limited tourist numbers and under-development.
Although 2023 is expected to be a difficult year, the government is expected to address these challenges seriously. This will be achieved through attention to industry and tourism, increasing exports and sources of foreign exchange earnings, which will result in stability of the Egyptian pound exchange rate against the US dollar between EGP 25 and EGP 28 per dollar.
The government’s IPO program will strengthen this stability, attract foreign direct investment and increase the number of tourists. This year, the Great Egyptian Museum will be opened, and the state will take serious steps to complete the path of the Holy Family and improve tourist services in various places.
Interest rates are expected to rise by around 3% in the first half of the year, before gradually falling in the second half.
The situation requires effective integration of different economic policies and must not leave the Central Bank of Egypt and its monetary policy alone. We must also quickly address these challenges and create incentives to attract foreign direct investment as soon as possible and consider integrating Egyptians abroad as investors in the national economy. This can be achieved by setting up investment funds that will generate returns acceptable to them, as well as reducing the taxes associated with the industrial process and investing in the Egyptian Stock Exchange.
dr Zakaria Salah – A banking expert
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