Egypt Watch

Egypt faces major import crisis, says the Wall Street Journal

The Wall Street Journal said that it has become increasingly difficult for Egyptians to obtain imported medicine, cheese, and electrical appliances, as the government has restricted imports to keep its foreign currency reserves in an acceptable condition. It pointed out that the shortage of imported medicines, clothing, and foodstuffs is sweeping Egypt, which has been dramatically affected by the increase in the value of the US dollar and the turmoil caused by the Russian war in Ukraine. Economists have attributed the main reason the government has placed obstacles to imports to its attempt to keep its foreign exchange reserves from eroding. Egypt needs US dollars to repay about $158 billion in foreign debt in the coming years and to purchase much-needed grain. According to the Wall Street Journal, the slowdown in imports in Egypt extended to a wealthier class who suddenly found themselves unable to find high-end goods. The difficulties also grew to basic foodstuffs such as bread and pasta. The grain industry has been hit particularly hard, with most private-sector factories unable to get dollars to buy wheat, which has risen by 20% in the last month.

The Egyptian government borrowed from the World Bank in June a loan of $500 million to import wheat. The Egyptian pound hit a record low against the dollar and fell 20% since the beginning of the year, and it is one of the worst-performing currencies in the world this year. The weakness of the Egyptian pound has exacerbated inflation by 15%, the fastest annual rate in Egypt in nearly four years.