At nightfall, a subdued light illuminates the pharaonic temples of Luxor like all the tourist sites in Egypt. Energy-saving measures decreed by the government came into effect across the country on August 13. They include in particular a reduction in the lighting of streets, public places, administrations and stadiums. Further decisions are expected in the industry sector. When they were announced on August 9, the Prime Minister, Moustafa Kemal Madbouli, explained that these measures, combined with others taken in recent months, would make it possible to “rationalize” natural gas resources and to consolidate foreign exchange reserves, by selling the “surplus” abroad.
Egypt has been suffering from a severe shortage of foreign currency since Russia invaded Ukraine in February. Reserves fell to 33.143 billion dollars (32.86 billion euros) in July, from 40.980 billion in January. The war has pushed up the world prices of raw materials – notably fuel and wheat, of which Egypt is the world’s largest importer –, led to the collapse of tourism and increased the cost of borrowing. The country has turned to its Gulf sponsors and is negotiating a new loan with the International Monetary Fund to try to replenish some of the $20 billion that left its bond market in the first half.
“Protecting Citizens”
All macroeconomic indicators are red and, as pressure mounts on the Egyptian pound, already devalued by 15% in March, the Governor of the Central Bank of Egypt, Tarek Ammar, announced his resignation on Wednesday August 17th. He is replaced by the financier Hassan Abdalla. With the global energy crisis, following the drop in Russian exports, Egypt can sell its gas ten times more internationally than it sells on the domestic market, said Moustafa Kemal Madbouli. It derives, in fact, limited income from local electricity consumption, due to the subsidies in place.
Egypt aims to produce 42% of its electricity from renewable sources by 2035
“In June, Egypt postponed, for the third time, until January 2023, the increase in electricity prices. She decided to protect the citizens [dont un tiers vivent sous le seuil de pauvreté], austerity measures had to be introduced”comments Alessandro Bacci, analyst at S&P Global.
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