Egypt

Egyptian inflation decelerated to the slowest pace in a year and a half, even after a steep currency devaluation and a historic move to raise the cost of subsidized bread, Bloomberg News reported. Consumer prices in urban parts of the North African country grew an annual 28.1% in May, compared with 32.5% the previous month, state statistics agency CAPMAS said Monday. That was lower than forecast by economists at Goldman Sachs Group Inc., EFG Hermes and Naeem Brokerage.

A key index of activity in Egypt’s non-oil economy climbed to its highest level in almost three years, finally approaching growth territory as inflation cooled and foreign currency became more available after a steep devaluation, Bloomberg News reported. The Purchasing Managers’ Index compiled by S&P Global, which measures the performance of the private sector, rose to 49.6 in May from 47.4 the month before. Though still below the 50 mark that separates expansion from decline, it’s at the highest since August 2021, according to a report published Tuesday.

Egypt’s credit rating outlook was raised to positive from stable by Fitch Ratings, after the North African nation secured an international bailout of $57 billion for its cash-strapped economy, Bloomberg News reported. Fitch affirmed Egypt’s B- rating, leaving it six notches below investment grade. It also came weeks after authorities agreed to a landmark $35 billion investment deal with the United Arab Emirates and additional support from the International Monetary Fund and the World Bank.

The executive board of the International Monetary Fund confirmed a deal with Egypt to increase its bailout loan from $3 billion to $8 billion, in a move that is meant to shore up the Arab country’s economy which is hit by a staggering shortage of foreign currency and soaring inflation, the Associated Press reported. In a statement late Friday, the board said its decision would enable Egypt to immediately receive about $820 million as part of the deal which was announced earlier this month.

The World Bank is set to provide Egypt with over $6 billion, boosting the global bailout for the North African nation’s struggling economy to more than $50 billion in the past few weeks, Bloomberg News reported. The Washington, D.C.-based institution said Monday the financing covers the coming three years, with half aimed at government support and the remainder to buoy a private sector seen as key to medium and long-term sustainable economic growth. The announcement came a day after the European Union pledged about $8 billion in aid, loans and grants.

Egypt struck a deal with the International Monetary Fund to extend the country an $8 billion loan, hours after allowing its currency to float freely and raising interest rates in a surprise bid to win back foreign investors as its economy comes under pressure from the war in Gaza, the Wall Street Journal reported. The Egyptian pound lost about 38% of its value against the U.S. dollar after the currency announcement, despite the Central Bank of Egypt raising key interest rates. The pound last traded at 49 pounds to one U.S. dollar, from about 30 the previous day.

Egypt is mired in a grueling economic crisis that’s left its 105 million-plus people gripped by uncertainty, but one thing seems all but assured: another currency devaluation is likely on the way, according to a Bloomberg commentary. The anticipated move would be the fourth major round of weakening for the Egyptian pound since early 2022 — and potentially the largest yet. Done correctly, it could help bring closer to an end the nation’s worst hard-currency crunch in decades, drawing foreign capital to the $400 billion economy and pulling it back from the brink.

Egypt held interest rates after inflation kept slowing from a record while the government eyes an expanded International Monetary Fund loan and speculation swirls over the timing of a much-awaited currency devaluation, Bloomberg News reported. The central bank left the deposit rate at 19.25% and the lending rate at 20.25%, its Monetary Policy Committee said Thursday. Nine of 13 economists surveyed by Bloomberg correctly predicted the decision, which maintains the benchmark at its highest level in data that stretches back to 2006.

The International Monetary Fund said it is in ongoing discussions with Egypt's government on additional financing as part of a current program, the Fund´s spokesperson Julie Kozack said in a press conference on Thursday, Reuters reported. "The exact size of financing is part of the ongoing discussions that IMF staff is having with the Egyptian authorities," Kozack added.

International Monetary Fund Managing Director Kristalina Georgieva told Reuters on Friday the Fund was "seriously considering" a possible augmentation of Egypt's $3 billion loan program due to economic difficulties posed by the Israel-Hamas war, Reuters reported.