The Egyptian economy in 2014: Egypt aims to reduce its budget deficit

The Egyptian economy passed through many political, social and security crises since January 2011.

The Egyptian revolution carries a challenging transition phase, starting with problems such as low foreign direct investments (FDI), high budget deficit, high debt rate, high unemployment rate, high poverty rate, and low standard of living. Facing the worst energy crisis in years, citizens are mostly outraged over the frequent power cuts, which have been gradually increasing to unprecedented levels throughout the past couple of years.

The crisis of rising US dollar against the Egyptian pound in turn led to a rise in prices of food commodities and gold, which will result in a decrease in the purchasing power and lead to higher inflation.

Although there was an increase of Foreign Exchange Reserves from 16,687 USD million in June of 2014 to 16,736 USD million in July of 2014, Egypt’s FX reserves represent a problem for the Egyptian economy. The country’s FX reserves averaged 23,795.90 USD million from 2003 until 2014, reaching an all time high of 36,038 USD million in December of 2010 and a record low of 13,448 USD million in March of 2013.