Cairo – Mubasher: Egypt's medium-term financing outlook is set to improve dramatically, with a projected surplus of $26.50 billion over the next four years, compared to a previous deficit of $13 billion.
This positive shift is attributed to significant developments including the UAE’s investment in the Ras al Hekma project, the flotation of the pound, and a new deal with the International Monetary Fund (IMF), according to a report by Goldman Sachs.
Despite this optimism, Egypt's current account deficit is expected to widen to 2.5% of GDP by the end of 2027, driven by increased imports.
However, a surge in foreign direct investment (FDI) reaching over $33 billion in 2024 is anticipated to offset this deficit to a significant extent.
Forecasts indicate Egypt's foreign exchange reserves will surpass $60 billion by end-2027, boosted by the conversion of GCC deposits into equity in new projects.
Additionally, portfolio inflows are predicted to rebound this year, exceeding previous expectations due to the pound's devaluation and interest rate hikes.
Goldman Sachs expects approximately $15 billion in net inflows for this year, with stabilisation anticipated in subsequent years.
While no external issuance is projected for this year, it's estimated to resume next year with an annual issuance of around $2 billion.
Conversely, other capital outflows are anticipated to increase, reaching $20 billion this year. Of this, $2 billion is earmarked for clearing the foreign exchange (FX) backlog, while $18 billion is allocated for banks to improve their external balance sheets.
In Goldman Sachs’ scenario, foreign exchange inflows are forecasted to outpace funding needs, bolstering FX buffers and indicating a positive outlook for Egypt's financial future.
In March, Egypt concluded a final deal with the IMF for an $8 billion financing package.
During a special monetary policy meeting earlier today, the CBE announced a 6% increase in interest rates.
The official exchange rate between the US dollar and the Egyptian pound reached a historic high, surpassing EGP 50.
On 17 March 2024, the USD exchange rate at the Commercial International Bank (CIB) stood at EGP 47.27 for buying and EGP 47.37 for selling.
