Egypt allocates $2.5 billion to contain self-inflicted currency crisis
Egypt allocates $2.5 billion to contain self-inflicted currency crisis
A massiveÌýpackage of aid was announced by the Egyptian government on Monday, to counteract the effects of inflation on the country's poor triggered by an earlier decision to float currency.
2 min read
The payments are aimed at helping the nation's lower and middle class citizens [Getty]
Cairo announced a major 2.49 billion US dollar package of tax cuts, cash subsidies and increased pension payments targeted at improving living conditions for the country's poor during a period of extreme inflation triggered by its floatation of the national currency.
The payments are aimed at helping the nation's lower and middle class citizens pay for rising living costs, which have been leading to increasing discontent with President Sisi's government.
The payments will begin as of the start of Egypt's financial year, July 1, a government communique said.
The statement did not give any word on how the government, which is in economic turmoil, would pay for the package.
Egypt has received three payments totalling 3 billion US dollar from the World Bank since a separate 12 billion US dollar deal was finalised with the International Monetary Fund (IMF).
This IMF deal in November was dependant on ambitious economic reforms including reducing state subsidies and floating the currency for the first time.
These decision were put forward by the country's authoritarian President Sisi as an essential condition to reinvigorate the country’s flatlining economy, but instead directly led to the country’s massive inflation.
As a result of this inflation, the IMF revised Egypt’s economic outlook by shaving half a percentile of the country’s national GDP for 2017.
The package may only counteract the negative effects expected by the next round of subsidies to be cut in a few months time.​
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