A Reuters poll showed that growth in the Egyptian economy will be at a slower pace than previously expected, while the pound will depreciate slightly more than earlier expectations.

Despite the economy growing steadily amid shocks from the Covid-19 pandemic and the Ukrainian war, Egypt has long been plagued by foreign exchange shortages, record inflation and a rising debt burden.

In December, the government agreed to a $3 billion loan program with the International Monetary Fund, amid pledges to adopt a flexible exchange rate regime, reduce the state’s role in the economy and boost the private sector.

However, the first review of the scheme has been postponed as the exchange rate has remained stable at around 30.85 pounds to the dollar since March.

The median forecast for growth in a July 10-18 Reuters poll of 13 economists was 4.2 percent in the fiscal year that began July 1, down slightly from the 4.5 percent growth forecast in April.

The poll also expects growth to pick up to 4.8 percent in fiscal 2024-2025.

The Egyptian government aims to increase GDP by 4.1 percent in the fiscal year 2023-2024, according to the official website of the Council of Ministers last March.

Yesterday, Wednesday, Egyptian Finance Minister Mohamed Moeed said preliminary data showed real GDP growth of 4.2 percent in 2022-2023.

The survey’s median forecast indicated that the pound would fall to 34.8 against the dollar by the end of the year, slightly lower than the previous forecast of 34 pounds.

Economists expect the pound to fall to 36.95 against the dollar by the end of 2024 and to 38.90 next year.

The currency has lost about 50 percent of its value against the dollar in a series of sharp devaluations since March 2022, and it is still facing pressures in the parallel market.

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Annual urban inflation rose to a record 35.7 percent in June, surpassing its highest level recorded in 2017, following a sharp currency devaluation under the previous IMF plan.

An average forecast of 11 economists polled by Reuters indicated that inflation in Egyptian cities will fall to 22 percent in the current fiscal year June 2024 and fall to 13 percent next year.

In an earlier survey in April, economists’ median forecast for inflation in Egyptian cities was 20.9 percent in fiscal 2023-2024 and 9.3 percent in fiscal 2024-2025.

Bankers and analysts say the increase in the money supply has been used to offset a growing budget deficit, leading to a further rise in inflation and further pressure on the pound.