Egypt Sees Dramatic Rise in Remittances Following Economic Reforms
In an impressive turn of events, remittances sent by Egyptians working overseas surged by an astonishing 73.8 percent year-on-year in May 2024, reaching nearly $2.7 billion, according to the Central Bank of Egypt (CBE). This is a significant leap from the $1.6 billion recorded in May 2023. On a month-to-month basis, remittances in May 2024 increased by 26.6 percent compared to April 2024, which registered approximately $2.2 billion.
Driving Factors: Economic Reforms and Incentives
The CBE attributes this remarkable surge to a comprehensive economic reform package that Egypt launched on March 6, 2024. These reforms included steep interest rate hikes: the overnight deposit rate, overnight lending rate, and the main operation rate were all raised by 600 basis points, reaching 27.25 percent, 28.25 percent, and 27.75 percent, respectively. The discount rate was similarly increased to 27.75 percent. These measures were aimed at countering inflation and stabilizing the national currency.
Tackling Dollar Shortages
A critical component of the reform package involved addressing the persistent shortage of U.S. dollars. To this end, Egypt entered into a $35 billion agreement with the United Arab Emirates to develop the Ras El-Hekma zone on the North Coast. Furthermore, the International Monetary Fund (IMF) approved Egypt’s request to enhance its existing loan program by $5 billion, providing a much-needed buffer.
Broad International Support
Egypt’s efforts have garnered international backing from various financial institutions and development partners. The European Union has pledged $8 billion over three years, while the World Bank Group has committed $6 billion within the same period. Additionally, the United Kingdom has made a $400 million contribution to support Egypt’s economic initiatives.
Appealing to Overseas Egyptians
To further ameliorate the dollar shortage, Egypt has launched initiatives to attract funds from Egyptians working abroad. These initiatives are seen as crucial given that Egypt ranked sixth globally in remittance receipts in 2023, with inflows totaling $11.09 million, according to data from the Central Agency for Public Mobilization and Statistics (CAPMAS).
A Promising Outlook
Given these substantial economic measures and international support, the outlook for Egypt’s economic stability appears promising. The dramatic increase in remittances is not only a testament to the resilience of Egyptians working abroad but also reflects the confidence sparked by the recent economic reforms.
For more information on Egypt’s economic developments, visit the Central Bank of Egypt.
