Egypt’s remittances from its overseas workers surged to $7.5 billion in the April-June quarter, up from $4.6 billion a year earlier, the Central Bank of Egypt reported. This signals that an IMF-inspired currency reform implemented in March has been bearing fruit.
Remittances are by far Egypt’s largest source of foreign currency inflows. However, these inflows had plummeted over the prior two years, as workers shied away from bank transfers due to an overvalued official exchange rate.Â
Remittances had dropped sharply, from $31.92 billion in the 2021/22 fiscal year to $22.08 billion in the 2022/23 fiscal year that ended in June. They fell further to $9.45 billion in the second half of 2023. However, in June 2024 alone, remittances jumped to $2.6 billion, up from $1.5 billion in June 2023, the central bank noted.
Currency reform and exchange rate
Prior to the March reforms, the Egyptian pound was officially pegged at 30.85 to the U.S. dollar, but traded as low as 74 on the black market. Under the IMF agreement, the government allowed the market to determine the pound’s value. On Wednesday, the pound was trading at 49.15 to the dollar.
On July 30, the IMF approved a fresh disbursement of $820 million to Egypt after the IMF’s Executive Board completed the third review under the $8 billion loan program.
The decision follows a positive assessment of the country’s economic performance since the program began in December 2022. The IMF’s Executive Board completed the third review of Egypt’s 46-month Extended Fund Facility (EFF) arrangement.
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