US Secretary of State John Kerry on Saturday praised Egypt for reducing expensive fuel subsidies and liberalising its foreign exchange system in accordance with conditions stipulated by the International Monetary Fund (IMF) in order to secure a $12 billion loan.
Kerry noted that endeavours to stabilise Egypt’s flagging economy would remain “challenging” but added that “It is encouraging that Egyptian leaders are making the difficult decisions needed to move their country towards prosperity.”
On Thursday Egypt took the unprecedented step of free floating its currency as part of an effort to stabilise its economy.
Cairo had been reluctant to exact the measure, but amid dire economic conditions did so in order to secure the $12 billion IMF loan.
Economic experts have said that the measure is necessary to halt Egypt’s current currency crisis, but have argued that it will do little to improve the economy in the long term without structural policy reforms.
Egypt has struggled to revive its economy since the overthrow of former President Hosni Mubarak in 2011.
Tourism revenues have almost completely dried up, shortages in foreign currency reserves have led to the emergence of a black market for the dollar, while the curbing of imports has contributed to shortages of basic commodities such as sugar.
Additionally, in recent weeks a diplomatic row with Saudi Arabia has led Riyadh to suspend a $23 billion deal to supply Cairo with 700,000 tons of cut-price refined petrol products per month over a five year period further causing panic in Egypt as to whether the country would be able to afford an alternative deal.
Source: The New Arab
