Egypt has suffered $7 bln in direct loss amid Ukraine crisis
The Egyptian prime minister reveals how much the Egyptian economy is losing during the Ukraine war-ignited economic crisis that has affected the globe.
Mostafa Madbouly, Egypt's Prime Minister, said on Sunday that the Egyptian economy has suffered $7 billion in direct losses due to the conflict in Ukraine.
"The consequences of that conflict caused enormous financial spending for us, we as Egyptians should know. Today we counted that the direct impact [of the hostilities in Ukraine], which is already felt and will be felt as a result of the increase in strategic goods prices... is 130 billion Egyptian pounds [on a year-to-year basis]," Madbouly told a press conference, noting that direct losses could reach 335 billion Egyptian pounds - or, around $18 billion.
About 42% of Egypt's grains are imported from Russia or Ukraine, and 31% of all tourists in the country are Russians and Ukrainians, according to the minister. However, Cairo has been seeking alternative suppliers of grain while attempting to attract visitors from different countries.
Read more: Arabs fear for wheat supplies after Ukraine crisis
Ukraine and Russia, which share the Black Sea, are the world's breadbasket: they provide collectively 28% of global wheat exports. Russia and Belarus, in parallel, provide 40% of potash, an important fertilizer. Countries dependent on imports, particularly poor countries, are the first victims of this downfall as grain and corn prices are on an increase.
The Egyptian government has adopted some measures to reduce the negative impact of global events on the economy. The measures include strengthening the private sector and localization of industry while boosting the Egyptian stock exchange.
"Egypt would have neither overcome the crisis caused by the coronavirus nor withstand this crisis if it was not for the program of economic reforms and the unprecedented pace of development," said Madbouly.
In March, Egypt started experiencing further inflation as the world took the impact of the deepening economic crisis which resulted from the war.
In this case, Egypt issued a decree that regulated the prices of subsidized and unsubsidized bread.
Cairo even rendered a three-month export ban in effect, prohibiting the import of seed and vegetable oils, corn, flour, wheat, beans, and beyond.
Read more: How normalization with "Israel" assassinated Egypt's economy
By mid-March, Egypt saw its bread prices up, which were standing at 1.50 Egyptian pounds per loaf, as costs for wheat products have been skyrocketing, affected by the crisis in Europe and supply shortages. Experts were even warning that another increase was just around the corner.
A third of the Egyptian population lives below the poverty line, meaning that price hikes on a good as essential as bread would have grave repercussions on the country's working class. The International Monetary Fund (IMF) had already advised Cairo to focus on its food security issues exacerbated by the fighting in Ukraine and the West's sanctions on Russia.
Cairo held talks with the IMF to negotiate a loan to the struggling country, but even if the funds were to make it to Egypt, the disruption of wheat supplies still constitutes a serious issue for the country.