Egypt FX inflows match expenditures for 1st time in years
Madbouly’s remarks came in a press conference following the cabinet’s weekly meeting.
He pointed out that the real challenge will be to transition from equilibrium to surplus, as achieving a fiscal breakthrough is crucial for ensuring economic stability and growth in the country’s economy.
This remarkable progress follows a severe foreign exchange shortage that heavily derailed Egypt’s economy in recent years.
For over two years, dwindling reserves created challenges in securing imports and stabilizing the Egyptian pound, leading to heightened inflation and economic uncertainty.
In response, the government and the Central Bank of Egypt (CBE) implemented sweeping reforms, including adopting a more flexible exchange rate and strategies to attract foreign investment.
Economic recovery backed by rising foreign reserves
Egypt’s economy demonstrates fiscal resilience, with multiple indicators pointing towards recovery. The Purchasing Managers’ Index (PMI) exceeded 50 points for the second consecutive month, signalling a positive outlook from the private sector.
The achievement coincides with an unprecedented reversal in net foreign assets, which climbed from $5.96 billion in December to $8.7 billion in January. According to PM Madbouly, the apex is attributed to a deliberate stabilization of the exchange rate.
This ambition is underpinned by targeted reforms in key sectors across industry, agriculture, telecommunications, and tourism, which are expected to drive hard currency inflows and reduce external vulnerabilities.
Madbouly credited this achievement to the CBE’s vigilant monitoring of foreign currency flows, with biweekly reports guiding policy decisions.
Foreign reserves had risen to a remarkable $47.4 billion, with January alone seeing a $128 million rise over the previous month. This signalled robust currency management even during periods of heightened consumption and increased demand for foreign currency, such as the lead-up to Ramadan.
On an unprecedented scale!
“The last two weeks’ foreign currency resources have been quite equivalent to expenditures in the same period, indicating that we as a country are on the right track despite all the challenges,” Madbouly noted.
He expressed confidence in such metrics to validate the country’s forward momentum, adding that the stability of the exchange rate is central to meeting national economic goals.
“During the next period, we aim not only for balance but also to achieve a surplus in this direction to support the strength and status of the Egyptian economy,” Madbouly advised.
Advancing green industry: Ras Shukheir’s transformation
Among the cabinet’s key resolutions was the approval to convert lands in Ras Shukheir, located in the Gulf of Suez, into a dedicated green industrial zone. The area will become a hub for petrochemical production, green hydrogen, and derivative industries, aiming to reinforce Egypt’s standing as a leader in clean energy technologies.
The decision aligns with the country’s sustainable development goals and increased export capacity. Agreements were also reached to finalize contracts for green ammonia and hydrogen production projects in the Ras Shukheir logistics zone, involving alliances between the Red Sea Ports Authority, the New and Renewable Energy Authority, and a coalition of international firms.
Madbouly emphasized that such projects are vital to Egypt's Vision 2030 agenda, ensuring energy sustainability and enhancing competitiveness in global markets.
Industrial expansion: The Suez Canal economic zone transformation
Madbouly highlighted the remarkable growth of the Suez Canal Economic Zone (SCZone) as a lodestar for Egypt’s industrial revival. In just three years, the number of operational factories in the zone has doubled from 65 to 130, with an additional 120 factories under construction.
The PM’s recent visit to the SCZone included the inauguration and inspection of 11 new factories, including textile, automotive, and solar panel production facilities. These industries are central to Egypt’s bold clean energy agenda.
Egypt hopes to achieve self-sufficiency in solar panel manufacturing by the end of 2025. This is a key milestone in the country’s 2030 Vision, which targets renewable energy, comprising 42 percent of the national energy mix.
Madbouly framed the strides made in the SCZone as a watershed marker of Egypt’s resolve to advance industrial expansion and sustainability. He further characterized the SCZone as a distinguisher of global investment activity and a catalyst for groundbreaking innovation within the nation’s economic framework.