The Central Bank of Egypt (CBE) sent out a warning to its citizens last September against engaging in crypto trade. The violation attracts an imprisonment and a fine of up to $325,000.

Regardless of the law, up to 3 million out of 111 million Egyptians own cryptocurrencies. The country’s internet penetration, which stands at 72%, is expected to elevate the interest in digital currencies.

Here are some notable events in Egypt’s financial sector in the last five months:

January 2023 – Exploring Digital Currencies

CBE released a report on digital currencies, particularly Central Bank Digital Currencies (CBDCs). CBE indicated that CBDCs are safe and stable, as an alternative to other types of cryptocurrencies and their risks regarding the digital economy, financial inclusion and digital financial services.
Egypt’s annual urban consumer price index jumped to a higher-than-expected 25.8% in January, its fastest in more than five years.
The North African nation’s economy is also forecast to slow down, where growth is expected to be 3% in 2023 after growing 5.8% in 2022.

February 2023 – Seeking Foreign Exchange Inflows

The government detailed plans to sell its stake in 32 selected state companies this year. Reuters reported that the urgency has been renewed due to the Russian invasion of Ukraine which triggered heavy foreign investment outflows from Egyptian financial markets and threw the economy into crisis.
The annual urban inflation rate in Egypt further accelerated to 31.9% in February 2023, from 25.8% in the previous month, and well above market expectations of 26.9%. It was the sharpest inflation rate since August 2017, according to Trade Economics.

March 2023 – Economy Goes Digital

The Central Bank of Egypt (CBE) approved the rules governing payment card service codes, allowing contactless transactions via mobile apps in line with the National Payments Council. Card code services allow payment cards to be registered on smart device applications, and used to complete payments on electronic points of sale, or online purchases in an easy, secure and innovative way

April 2023 – Weakening Egyptian Pound

The Egyptian pound is classified as one of the worst-performing currencies in 2023 so far. The Egyptian pound has weakened by almost 20% against the US Dollar since the start of 2023. CNBC states that the Egyptian pound is ranked the sixth worse performing currency in 2023.
According to a Reuters Poll, Egypt’s economy will grow 4.0% this fiscal year and 4.5% next even as it endures a continuing depreciation in its currency.
The annual urban inflation rate in Egypt cooled for the first time in nine months to 30.6% in April 2023 from 32.7% in March. It was mainly due to subtle rises in food inflation, from in March 54.7% to 62.9%.

May 2023 – State-held Corporation Up for Sale

The Egyptian finance ministry has announced the selling of a 9.5% stake in state-controlled Telecom Egypt for $122.4 million, in a move that galvanizes February’s plan to sell government stakes in over 32 companies.
Fitch Ratings downgraded Egypt’s sovereign credit rating by one notch to ‘B’ from ‘B+’ and kept a negative outlook, reflecting the agency’s pessimistic outlook on the Egyptian economy.

-Edited by Shigeru Sato, Faustine Ngila