Egypt’s Prime Minister Mostafa Madbouly announced during a cabinet meeting on 25 December that the government is working with the Central Bank of Egypt (CBE) to release goods stuck at the country’s ports, particularly food supplies, local media reports.
Though he did not disclose details of the plan, the prime minister stated that efforts are being made by the government to control price spirals and ensure the sufficient supply of various commodities ahead of the holy month of Ramadan, later in March.
Cabinet spokesman Nader Saad revealed that between 1 December and 23 December 2022, the Egyptian government released goods from ports valued about USD 5 billion (EGP 123 billion), out of a total of USD 14 billion (EGP 346 billion) worth of goods stuck at ports.
As of 25 December, the value of the remaining commodities stranded at ports was estimated to be over USD 9.5 billion (EGP 235 billion), Saad disclosed.
Due to import restrictions put in place by the government to conserve foreign currency, commodities worth USD 14 billion (EGP 346 billion) have, at one point, been held at Egyptian ports.
The CBE stated in late October that it would begin gradually repealing the requirement of letters of credit (LCs) for import financing as a means of managing foreign exchange, a stipulation activated in February 2022. The procedure is expected to reach completion by the end of December, according to the CBE.
The CBE also announced in October an increase in the exception limit for LCs for imported goods from USD 5,000 (EGP 123,000) to USD 500,000 (EGP 12 million).
Egypt’s economy has been severely hit by the Russia-Ukraine war. Since the conflict, Egypt has faced financial constraints that have weighed on its currency due to higher commodity prices and a sudden drop in portfolio investments. In early March, it was estimated that portfolio outflows from Egypt were at USD 3 billion (EGP 69 billion), signaling a massive reduction in foreign reserves.
In response, the Monetary Policy Committee (MPC) decided to raise the CBE’s overnight deposit rate, overnight lending rate, and the rate of the main operation by 200 basis points to 11.25 percent, 12.25 percent, and 11.75 percent, respectively.
As a result, the Egyptian pound dropped to a near all-time low since the 2016 devaluation, trading at EGP 19.27 to the dollar.