ALBAWABA – After Egypt secured a deal with UAE last month to receive $35 billion in a mega investment deal that includes the development of Ras El-Hekma’s coastal region, Cairo announced an interest rate 600 basis-point hike that sent the Egyptian pound on a harsh downward spiral; in hopes to attract more foreign investments.
President Abdel-Fattah El-Sisi’s bet to increase interest rates by 27.25 percent and leaving it to markets to decide exchange rates, which plunged the pound down to a record 50 per dollar, is expected to drive inflation and causing immense hardship for the 105 million Egyptians in the short-term according to Bloomberg.
However, Bloomberg adds that Egypt is hoping by attracting foreign investments with higher interest rates it can partially recover from the lack of foreign currency in reserves, which has been a crippling point for the country’s economy, with the Israeli war and regional escalations adding more fuel to the fire.
Egyptian media has reported on Wednesday, after the interest rate decision, that a new deal with the International Monetary Fund is being negotiated with a team from Washington landing in Cairo, in hopes to increase Egypt’s $3 billion loan all the way to $10 billion, potentially easing the country’s worst economic crisis in decades.
Hisham Ezz Al-Arab, chairman of Commercial International Bank, Egypt’s largest private lender has said according to Bloomberg: “The most important thing to restore confidence completely is the commitment to this painful process.”
