CAIRO - 9 January 2024: The Egyptian government aims to accumulate foreign reserves amounting to approximately $300 billion over the next six years.
This ambitious goal, which is three times the current figure, aligns with President Abdel Fattah El-Sisi's new term, focusing on narrowing the dollar gap, and enhancing economic stability.
The country’s net international reserves (NIR) increased $4.6 billion during December 2023, recording $35.219 billion, compared to $35.173 billion at the end of November 2023, according to the Central Bank of Egypt (CBE).
Egypt has been facing a foreign exchange shortage crisis since March 2022, after it was negatively affected by the repercussions of the global inflation wave and the Russian-Ukrainian war, which caused the exit of billions of dollars in indirect foreign investments, and an increase in the import bill of basic goods, most of which are imported from abroad.
The plan was revealed in a document prepared by the Cabinet titled "Key Strategic Directions for the Egyptian Economy for the New Presidential Term 2024-2030."
To clarify, Egypt relies on five primary sources for obtaining hard currency: export revenues, tourism, Suez Canal revenues, remittances from expatriates, and foreign direct investments (FDI).
Egypt Today reviews the details of the state’s plan to collect this amount during the coming years.
Exports
The document prioritizes export revenues with a target to increase their value by at least 20 percent annually, reaching $145 billion by 2030. This involves the establishment of 10 specialized export zones, the development of 10 export industrial clusters, targeting 10 promising export markets to enhance the accessibility of Egyptian goods, and boosting service exports, particularly outsourcing services expected to grow at 10 percent annually to reach $13 billion over six years.
Tourism and Suez Canal Revenues
The government aims to increase its revenue by 20 percent annually, reaching $45 billion by 2030, up from the current estimated annual average of $12 billion.
Simultaneously, a yearly growth of 10 percent in Suez Canal revenues is targeted, reaching $26 billion, including the revitalization of the maritime services sector with a value of $4 billion.
Remittances from Expatriates
Egypt aspires to increase the expatriates from the Egyptian expatriates by 10 percent annually, reaching $53 billion over six years. This involves the opening of new foreign job markets for approximately one million Egyptians in high-demand fields such as artificial intelligence, biotechnology, information technology services, and nursing.
Foreign Direct Investment (FDI)
As for the fifth source of foreign exchange, foreign direct investments, the document indicates an annual increase of 10 percent, reaching $19 billion by 2030, including investments in real estate.
Financial Strategies
On another note, the document reveals Egypt's plan to issue long-term bonds ranging from 20 to 30 years, with the proceeds allocated to repay external debt service payments for the fiscal years 2023/2024 and 2024/2025.
The government also aims to allow the exchange of short-term debt issues with long-term ones, as part of ongoing efforts for fiscal discipline and moving towards more sustainable paths for public debt.
According to the document, Egypt will continue to adopt a flexible exchange rate policy to cover the gap between the official and unofficial exchange rates over a specified period.
The expected exchange rate for the Egyptian pound against the dollar is around LE 36.8 on average during the period 2024/2028, based on estimates from the International Monetary Fund (IMF).
Moreover, Egypt plans to launch the digital pound by 2030 to support the competitiveness of the national currency and enhance monetary policy efficiency.
Comments
Leave a Comment