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According to CNBC World in a research note issued recently, the bank expects the current account deficit to widen as imports rise at a faster pace with the availability of the dollar, which is only partially offset by an increase in remittances from Egyptians abroad. The bank says: “We expect the deficit to expand to 2.5% of GDP by the end of this year.”
At the end of last February, Egypt signed a real estate investment deal under which the ADQ Holding Company acquired the rights to develop the “Ras El Hekma” project for $24 billion with the aim of developing the region, in addition to transferring $11 billion in deposits that will be used to invest in major projects throughout the country. .
Egypt also obtained approval from the International Monetary Fund to increase the country’s support program from $3 to $8 billion, following the liberalization of the exchange rate and raising interest rates. On the other hand, the Financial Times newspaper published that the European Union is preparing a financing package for Egypt in the form of grants and loans until the end of 2027, with a value that may reach 7.4 billion euros.
Annual Dollar Flows
Goldman Sachs’ expectations indicate that Egypt will receive financing from the International Monetary Fund and other partners worth only $5 billion in 2024, the same amount in 2025, $4 billion in 2026, and $3 billion in 2027, with a total of $17 billion, which is the value of the IMF and World Bank loan and financing. European.
According to the data contained in the memorandum issued by the bank, Egypt’s foreign exchange reserves are expected to rise at a strong pace, reaching approximately $50 billion by the end of this year, before rising to approximately $61 billion in 2027.
It should be noted that the value of the Ras El Hekma deal, totaling $35 billion, is the largest direct investment in the country’s history, according to the government. Goldman Sachs expected that the value of foreign direct investments in Egypt during the current year would jump to $33 billion from $9.3 billion last year. It also expected that “it will rise faster than we expected with the stabilization of the overall economic situation and the recovery of investment in new projects.” He expected Goldman Sachs expects foreign direct investments to reach $12.9 billion next year, $15.7 billion in 2026, and $23.6 billion in 2027.
Regarding remittances from Egyptians abroad, Goldman Sachs expects a gradual return to remittances to reach a little less than $30 billion by the end of 2027, but they may accelerate in a way that compensates for much of the widening trade deficit in light of the devaluation of the pound greater than expected, and the raising of… Interest rates and stronger growth expectations.
Amandine Lhoste
Margaux Anbouba
