Egyptian Pound "Stronger than Expected"

The International Monetary Fund (IMF) has raised its forecast for the Egyptian pound's exchange rate against the dollar, reflecting an optimistic outlook for the Egyptian economy and the path of ongoing economic reforms. These new adjustments open the door to important economic analyses of the future of the pound and overall economic performance in light of influential local and international shifts.

The IMF's latest report revealed a change in its estimates for the Egyptian pound's exchange rate. According to the new forecasts, the average exchange rate to the dollar is expected to reach EGP 49.6 during the current fiscal year, compared to a previous estimate of EGP 50.6. For the next fiscal year, the estimate has been lowered to EGP 52.26, down from EGP 54.89 previously. The dollar is expected to reach EGP 54.1 in the following fiscal year, down from EGP 57.2.

Although the Fund does not directly announce these figures, these forecasts are derived from GDP data in local currency and against the US dollar, reflecting a significant improvement in the outlook for the Egyptian pound.

The Beginning of Recovery

Among the most notable positive points in the report, the Fund forecasts a significant decline in Egypt's current account deficit, starting next fiscal year to $14.24 billion, compared to current estimates of $20.5 billion. This improvement is expected to continue, with the deficit reaching $13.7 billion in 2026/27, before rising slightly again to $14.9 billion the following year.

It indicated strong export growth expectations for the next fiscal year, reaching 11.6%, compared to only 5.7% in the current year.

Among the positive factors highlighted in the report is the decline in the energy trade deficit, thanks to the decline in oil prices. According to estimates by investment bank CI Capital, every $10 drop in the price of oil below $74 per barrel will reduce the trade deficit by $2 billion by 2025, easing pressure on the economy and giving the pound more flexibility.

Regarding financing needs, CI Capital confirmed that Egypt needs between $27 and $29 billion, which will be covered by $10 billion for debt repayments, $10 billion in FDI, and $4 billion in global market financing.

The recent adjustments by the IMF, along with positive analyses from local and international experts, indicate an improvement in the Egyptian economy's position and a gradual return of international confidence. However, the challenges are not over yet, and the road to full recovery still requires further reforms, particularly in attracting investment, controlling spending, and achieving a balanced trade balance.

What is certain, however, is that Egypt is heading in a more stable direction, amid encouraging indicators and measured optimism about the future of the pound and the economy as a whole.