From October 23 to 25, Egypt hosted “The Egyptian Economic Conference 2022” to “draw a roadmap for the future of the Egyptian Economy.” While the conference resulted in a promising list of recommendations in several policy areas, the ability of the government to implement this extensive list in the coming months is uncertain due to its length. Furthermore, the conference itself was mainly a repackaging of existing ideas, and a similar list of recommendations was even previously discussed during a 2015 conference. For this reason, the conference mainly represented an attempt to pave the way for costly and burdensome economic reforms. 

Challenges to Reform 

One of the most urgent policy areas discussed during the conference was fiscal and monetary policy. The conference recommendations addressed the importance of bringing down the debt-GDP ratio, reaching a deal with the IMF, and issuing a new currency index. These areas are particularly relevant, as Egypt has been impacted by the Ukraine crisis, which caused a capital flight of more than 20 billion USD and severely lowered a key source of foreign currency for the country. The war, coupled with high inflation rates in the US, greatly increased Egypt’s import bill since it is a big importer of wheat from Ukraine and relies on imported oil. Additionally, although Egypt has decreased its short-term debt (percentage of reserves) from 50.5 percent to about 30.7 percent, the country still relies heavily on “hot money” to rebuild reserves. 

Against this backdrop, just days after the conference, on October 27, Egypt reached a 3 billion USD deal with the IMF, which was accompanied by a flexible exchange rate regime that brought down the Egyptian Pound (EGP) from 1 USD=19.74 EGP on October 26 to 24.45 EGP as of November 14. Moreover, the conference recommendations indicate a willingness on the part of the Egyptian government to make further progress towards economic reform. The proposal regarding the currency index, for example, represents a new approach in the Egyptian context. The government plans to use gold and other currencies instead of the USD for the new indicator. As Central Bank Governor Hassan Abdullah explained, Egypt should not base its currency solely on the USD, as Egypt is not an oil-rich country and, thus, cannot peg its currency exchange rate. The idea of an alternative currency index is not new; indeed, a number of countries have moved their reserve currencies towards new sources in the past few years. According to the IMF, three-quarters of the shift from the USD has been in reserve portfolios, such as the Australian and Canadian dollars, Swedish krona, and South Korean won, while a quarter of the shift has been towards China’s renminbi.

The other policy recommendations encompassed four groups, and emphasized the need to promote the role of the non-banking financial sector, the private sector, priority economic sectors such as agriculture, health, education, and real estate, and to develop the manufacturing sector. 

Implementation Challenges 

While the government announced councils that would ensure the implementation of recommendations, there is no guarantee that the country will follow through. While more detailed and transparent than before, this is not the first time that the government held an economic conference to discuss such policy steps. Yet, the government’s seemingly newfound interest in open communication is evidenced in the fact that the conference was held in tandem with the newly established National Dialogue, which includes members of the opposition such as Hamdeen Sabahy, the former presidential candidate, and Gameela Ismail, former president of the Dostour (Constitution) Party. The conference saw the government address questions raised by some members of this Dialogue and featured participation from opposition parties, government officials, the private sector, and technical experts. Finally, the conference was fully televised, likely in an attempt by the government to reassure the public about the country’s economic outlook. 

Ultimately, the conference sought to establish the fact that the Egyptian government is seeking to craft an economic policy for all Egyptians, with the interests of many sectors in mind. However, it is unclear why there was a need for a conference in the first place, as it occurred only four days before the floating of the EGP and drew upon many previous calls for reform. Thus, the conference appears to have been a useful justification for the adoption of policies already in the works—policies that will likely be costly for the average Egyptian. 

Antony Costantin is a political economist by training who focuses on the MENA region. He recently received an MA in Arab Studies from Georgetown University. Follow him on Twitter @AntonyAshrafC