The economic analyst at Oxford Economics Africa, Cali Davis, said in an interview with Al-Arabiya that the financing gap for Egypt will be much larger than the estimates of the International Monetary Fund and will reach $20 billion in 2023 only.
Davis expected that the Egyptian pound would continue to decline, bringing the dollar to 32 pounds by the end of 2023.
And she added, “We expect that the financing gap for Egypt will be around $20 billion for the year 2023 alone, and this includes higher expectations of the current account deficit with a decline in foreign direct investment flowing to Egypt, and lower estimates of investment portfolio flows, and we also believe that the external debt service will be higher.” From the estimates of the International Monetary Fund in its latest report, because the fund seems to be excluding short-term payments, so our estimates are much higher,” according to Cali Davis.
The economic analyst at “Oxford Economics Africa” said that the Egyptian pound is heading towards a “floating” exchange rate mechanism, especially since the head of the International Monetary Fund mission to Egypt confirmed that the Central Bank has not intervened in the exchange markets since October, while the last wave of the exchange rate decline came. The pound in January as a result of the release of some goods accumulated in the ports, which led to the withdrawal of foreign currency reserves, which led to the weakness of the Egyptian pound.
She added that the Egyptian currency is subject to further decline in the future, especially if foreign reserves are exposed to more pressure, which will limit the Central Bank’s ability to intervene in the exchange markets.-
And she continued, “Our current expectations are that the Egyptian pound will decline, so that the dollar will reach 32 pounds by the end of the year, and this will contribute to raising inflation.”--
“We expect inflation in Egypt to peak at 24 or 25% in March on an annual basis, and to decline to 17% by the end of the year in December,” said Callie Davis.
With regard to the exchange rate, Davis said: “We see that it follows a floating exchange rate mechanism or a mechanism close to that, but any downward pressure on foreign reserves will have negative repercussions on these expectations.”
Davis explained that since the recent decline in the exchange rate of the Egyptian pound, many media reports have been issued about the flow of investments and the increase in demand for Egyptian assets, adding, “But I see that as long as the uncertainty about the Egyptian currency continues, foreign investors will remain somewhat reluctant to invest in it.” Investing in financial assets issued by the Egyptian government, at least until they are sure that these assets will maintain their value, and will not decline against the dollar. This is a constant risk for the markets.