[PAGE_1]Flexible exchange rate: from narrative to reality[/PAGE_1]
[PAGE_2]De-anchored expectations[/PAGE_2]
[PAGE_2]Where do the structural external imbalances come from?[/PAGE_2]
[PAGE_4]Capital flight reveals a hardly sustainable external financing model[/PAGE_4]
[PAGE_4]2023: the long wait for the right momentum[/PAGE_4]
[PAGE_5]The IMF's bet, backed by the Gulf[/PAGE_5]
[PAGE_5]What risks hang over this renewed confidence?[/PAGE_5]
[PAGE_6]What to keep an eye on?[/PAGE_6]
CitationExiting the crisis hinges on transitioning to a flexible exchange rate system. But this will not suffice if the country fails to build a more solid economic model able to anchor investor expectations over the long term. Furthermore, Egypt not only needs a flexible exchange rate but also has to limit the impacts of this flexibility on its impoverished population without depleting its remaining budgetary resources.
The Egyptian economy, though weakened, is recovering from a two-year external liquidity crisis. The crisis is a reminder of the extent to which countries with debt and dependent on external financing are vulnerable to investor confidence. Thanks to substantial funding from the United Arab Emirates and the IMF, the country's external liquidity risk has dipped sharply. But this is not a long-term blank check of confidence. Exploring these issues will further our understanding of the gamble that external creditors are making on this country.
