Debt Addiction: Egypt seeks higher credit ceiling from the ITFC

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On Thursday, Egyptian President Abdel Fattah El-Sisi agreed to amend the agreement concluded in 2018 between the Egyptian government and the International Islamic Trade Finance Corporation so that the potential credit ceiling for Egypt would be $6 billion instead of $3 billion. The Egyptian Ministry of Planning has published on its website data showing that Egypt’s external debt had risen to more than $162.9 billion in 2022. Egypt’s external debt had thus increased by more than three times what it was ten years ago when it recorded $38.8 billion in 2012. The Egyptian Ministry of Planning has published on its website data showing that Egypt’s external debt had risen to more than $162.9 billion in 2022. On Thursday, Egyptian President Abdel Fattah El-Sisi agreed to amend the agreement concluded in 2018 between the Egyptian government and the International Islamic Trade Finance Corporation so that the potential credit ceiling for Egypt would be $6 billion instead of $3 billion.

According to estimates by the Egyptian Ministry of Finance, the country faces a funding gap of $16 billion over the next four years. On Monday, Egypt’s Central Agency for Public Mobilization and Statistics said that the country’s annual inflation had risen to 33.9%. According to a statement issued by the government body, food prices increased by 5.3%, as grain prices increased by 6.5%, meat and poultry by 5.0%, fish and seafood by 4.9%, dairy, cheese and eggs by 2.5%, oils by 0.9%, fruits by 6.2%, and vegetables by 14.0%. In addition, clothing prices increased by 1.7%, housing, water, electricity, gas and fuel by 0.7%, and transportation by 2.5%.

The Egyptian pound lost almost 32% of its value last year, according to the World Bank, which stated on Thursday that Egypt had higher inflation levels than most other nations in the Middle East and North Africa region. According to a new report by the international financial institution, Egypt ranked third among the nations regarding food prices, which increased by 26%. It said that a 1% increase in food prices would cause 500,000 people to become impoverished.

Egypt has resorted to various policies to contain inflation, including increasing food and fuel subsidies, imposing price controls, regulating trade, and providing cash assistance within social protection programmes.  However, the report says how these strategies will curb inflation is still being determined. According to the international organization, 6.9 million Egyptians will experience extreme food insecurity in 2023.