Egypt’s economy suffers from dollar shortage since imports are restricted

Christeen Aiad, who lives in eastern Cairo, had hoped to purchase a little automatic automobile this year, but regulations prohibiting importers from dealing in scarce dollars put a stop to that, so she now uses her bicycle to get around.

 

Egypt’s economic problems have worsened due to the conflict in Ukraine. It caused the import-dependent country’s cost for wheat and oil to climb, along with the demand for dollars, and it killed tourism from two of its biggest markets, Russia and the Ukraine, which was a major source of hard money.

 

Dollars are in limited supply as a result of investors pulling out of short-term government bonds and losing faith in the falling value of the Egyptian pound.

 

Unfortunately for individuals who had planned purchases, like Aiad, the new import regulations implemented earlier this year to stop the loss of foreign exchange reserves and support the pound led to a lack of products, which drove up inflation to levels not seen in four years.

 

The price of the car Aiad, 38, wanted to buy increased by 75% since she started looking last year, mirroring price increases for some other imported goods. ‘Even second-hand cars have become out of reach,’ she said. I gave up and made the decision to go without a car.

 

The automobile industry has been among the most affected, but dealers claimed the import squeeze has impacted everything from electrical components to textiles and spare parts.

 

According to new rules widely covered in local media, the central bank, whose governor was abruptly ousted in August, this week slightly loosened the limitations by enabling businesses to use foreign currency deposits or transfers to acquire letters of credit to pay for imports. A request for comment from the central bank received no response.

 

But it’s anticipated that the import bottleneck will persist.

 

According to a senior industry executive, Egypt’s annual finished vehicle imports, which were formerly valued nearly $8 billion, are predicted to fall by more than half this year. According to two used automobile sellers in Cairo, the cost of popular used cars has doubled, and some dealers are stockpiling them in preparation for future price increases.