Observing a nation devalue its currency four times in less than ten years and still not be out of the woods is unsettling. That’s precisely what Egypt has been doing. Before Russia invaded Ukraine in 2022, the Egyptian pound was trading at about fifteen to the dollar; since then, it has fallen to almost fifty-one. It’s not a correction. It’s unraveling slowly.
The most recent part of this tale occurred in March 2024, when the Egyptian Central Bank promised to move toward a market-determined exchange rate while allowing the pound to drop precipitously, by almost 40% in a single day. The International Monetary Fund increased its assistance package to $8 billion in exchange. In the same breath, the central bank increased interest rates by 600 basis points. The IMF had long required it as a prerequisite for any significant financial assistance, so it was a drastic step. It’s more difficult to say whether it was the right decision for regular Egyptians.
You can begin to grasp the true meaning of devaluation at the ground level by strolling through any Cairo market. During the peak of the inflation spike, food prices increased by more than 61 percent annually. Pasta, dairy, and poultry are the essentials. Individuals altered their diet. A lot of people took on second and third jobs. A declining pound is not an abstract macroeconomic development for the two-thirds of Egyptians who live on or close to the poverty line. It’s the cost of bread.
It took time for Egypt’s vulnerability to become apparent. Since President Abdel Fattah al-Sisi solidified his hold on power in 2013, the nation’s economy has primarily relied on government-led infrastructure projects that were funded by debt and controlled by businesses with ties to the military. Private companies were essentially driven out. It was a model that produced little resilience but bought political loyalty. The structural flaws had nowhere to hide when external shocks struck, first COVID-19 and then Ukraine.
By the Fund’s own standards, the conditions imposed on its loans have been exceptionally detailed. The top item on the list was a permanent switch to a flexible exchange rate, but there were other options as well, such as reducing the market presence of military-owned businesses and slowing down government infrastructure spending.
For a government that has relied on military loyalty as a cornerstone of its power, both are politically sensitive in ways that are hard to overstate. The administration of Sisi is aware of this. The government was conscious that its base of support might not be as strong as it seems, which is why it decided to start a national dialogue with civil society in recent years.
Egypt’s size and strategic importance make its situation especially pertinent outside of its borders. Egypt’s economy is not a tiny one that keeps its debt under wraps. It is located at the meeting point of North Africa, the Arab world, and the Suez Canal, a vital route for international shipping even after Houthi attacks in the Red Sea reduced earnings by almost half. This was recognized by investors who withdrew about $20 billion from Egyptian markets between early and late 2022. In a significant change, regional Gulf partners who previously offered financial assistance are now collaborating with the IMF instead of sending unconditional checks.
Some people are still cautiously optimistic. Egypt’s economy now has more foreign exchange liquidity than it did during earlier crises, according to economists and business executives, and a more flexible exchange rate regime theoretically lessens the accumulation of the kinds of pressures that led to earlier abrupt collapses. The IMF itself recognized Egypt’s significant advancements toward macroeconomic stability by the middle of 2025. However, in recent budget cycles, debt servicing is still expected to account for more than half of all government spending—a statistic that is difficult to ignore.
Whether Cairo’s agreed-upon structural reforms will endure politically long enough to have an impact on the economy is still genuinely unclear. The true story behind Egypt’s currency crisis is this tension between what is necessary for fiscal health and what is manageable for a government handling actual social pressure. The value of a pound is a number. It stands for something far more intricate.
