Egypt is running out of dollars. The political turmoil following the revolution caused investors to flee and slowed tourism to a halt. As Egyptians scramble to exchange their weakening pounds for dollars, “foreign exchange offices can only supply 20 percent of the dollars for which they receive orders,” Reuters reports.
Egyptian officials are remaining hopeful:
Essam Haddad, [President Mohamed] Mursi’s deputy chief of staff and foreign policy adviser, told Reuters in an interview that he did not expect the pound to fall further after it lost more than 8 percent against the dollar since the start of the year.
“I think it has reached a level of stability,” he said.
But it doesn’t look too promising. Via Meadia has been following the Egyptian economic meltdown over the past few weeks, and it’s clear that the situation is continuing to deteriorate. Egypt has been holding dollar auctions since December, and as the dollar well continues to run dry, less and less of the currency has been auctioned off, giving rise to a currency black market.
A long awaited $4.8 billion IMF loan depends on the Morsi government’s imposing certain austerity measures, and while Egyptian officials have indicated that steps have been taken in this direction, the loan doesn’t seem to be any closer to materializing.
And so the Egyptian death spiral continues. As the dollar shortage worsens, the Egyptian government will be more hard-pressed to import the crucial goods and provide the subsidies locals depend on for survival. Social unrest will accelerate, only worsening the economic situation. Now the world can only wait to see what, if any, foreign aid comes to Egypt’s rescue, and what political movements will arise in the meantime.