Egypt’s annual inflation rate hit a record high of 36.8% in June, according to official figures announced on Monday.
The country is in the midst of an economic crisis, exacerbated by Russia’s invasion of Ukraine in February 2022.
The previous record inflation rate of 34.2%, in July 2017, followed a sharp devaluation of the country’s currency linked to a bailout loan from the International Monetary Fund (IMF). This year’s record similarly comes after a bailout loan from the IMF last year.
The Egyptian pound has lost half its value in a year which has made conditions even more difficult for households as prices rise.
Even before the current economic crisis, two-thirds of Egypt’s 105 million inhabitants lived under or just under the poverty line, according to the World Bank.
Conflict in Ukraine
Russia’s war in Ukraine heavily impacted Egypt which is one of the world’s largest grain importers. The invasion last year sent wheat prices skyrocketing and destabilised international markets.
In Egypt, investors withdrew billions in foreign currency, causing the country’s dollar reserves to plummet to 20%.
Reserves have risen since to $34.8 billion in March, including $28 billion in deposits from the country’s wealthy Gulf allies, up $500 million since February. But they would need to increase by $7 billion to reach pre-war levels.
Egypt, one of the five countries in the world most at risk of defaulting on its external debt, according to ratings agency Moody’s, has had to rely on bailouts from Gulf countries and the IMF in recent years.
The IMF approved a loan of $3 billion to Egypt, whose external debt has more than tripled in ten years, attaining a record of $165.4 billion this year, according to figures provided by the Ministry of Planning.