Egypt’s Prime Minister Mostafa Madbouly said that the exchange rate doesn’t reflect the strength of the economy, and Egypt’s main concern is controlling inflation, pointing out that some countries have taken measures to weaken their currency.
The Prime Minister’s remarks came during the Egyptian Economic Conference 2022, organised by the Egyptian government, which kicked off on Sunday.
“Currency devaluation may be a measure to boost investments and support the economy,” he stressed.
Egypt is among the most affected countries by the global economic crisis, and establishing a road map for the economy requires recognising the challenges we face, said Madbouly.
He stressed that the Egyptian Economic Conference 2022 comes amid one of the worst global economic crises in 80 years.
Regarding Egypt’s external debt, he explained that 73% of the country’s external debt is medium and long-term.
“In the 1980s and early 1990s, the foreign debt to GDP ratio reached 150%. Egypt reached an agreement with Paris Club and Arab countries, to slash approximately $43bn of debt. The figure went down since then and now it stands at 34.5%.”
However, we need to admit that we have a problem which is that the debt to commodity exports ratio has exceeded the safe limits, thus, we need to work to return it to the safe zone, Madbouly indicated.
The overall debt to GDP ratio is far from 100% as it was in previous years, but it may reach 90%.
He stated that emerging countries are resorting to financing to achieve economic stability, attract investments, and restore the downward path to reducing debt.
He stated that there are many countries that have resorted to this, including China, Turkey and Vietnam.
Furthermore, the Prime Minister added that major financial institutions revised their views on the Egyptian economy between 2011 and 2020, noting that the International Monetary Fund expected an increase in Egypt’s GDP growth rates.
Madbouly pointed out that the Egyptian economy was affected in an unprecedented manner by the political turmoil of 2011 and 2013. “Egypt’s credit rating was downgraded 6 consecutive times in 28 months, between February 2011 and May 2013,” he noted.
Madbouly said that the rate of industrial investment in contributing to meeting local needs decreased from 22% to 10%.
Madbouly stated that the main productive sectors also suffered a decline, led by tourism and industry, and the foreign reserves declined.
The Prime Minister compared the current economic conditions with the conditions of the Egyptian state before the economic conference in 1982.
At the time, there were shortages in most commodities, which were documented through drama and cinema at this time.
The conference will include three tracks: macroeconomic policies, widening the scope of private sector contribution to the national economy, and drawing up a roadmap for the Egyptian economic priorities in the coming stage.
