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Asharq Al-Awsat
Asharq Al-Awsat
Business
Cairo - Asharq Al-Awsat

Egypt Expects $12 Bn in Gas Revenues in 2022

A view of a gas plant seen from the desert road of Suez outside Cairo. (Reuters)

Egypt's gas revenues are expected to reach $12 billion, and about $7 billion from oil derivatives and petrochemicals, announced petroleum minister Tarek el-Molla.

Molla spoke to Skynews Arabia on Monday on the sidelines of his participation in the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC).

He said that Egypt aims to increase liquified natural gas (LNG) exports to eight million tons this year, adding that the country can export up to 12 million tons of LNG annually.

Egypt depends on gas exports to increase the foreign currency when the country is suffering from a scarcity of the dollar, which causes problems for exporters.

For the third time since 2016, Egypt has liberalized the exchange rate, causing the pound to lose about 50 percent of its value since the beginning of this year.

On Thursday, Egyptian authorities liberalized the exchange rate to end the black market, where the dollar price reached 24 to 25 EGP, coupled with the Central Bank of Egypt's (CBE) decision to raise interest rates by two percent.

An International Monetary Fund (IMF) official said that Egypt's move to raise interest rates is a step in the right direction, and a flexible exchange rate will help protect its economy from shocks during tightening global financial conditions.

Egyptian authorities pledged a "durably flexible" exchange rate with a staff-level agreement for a $3 billion IMF extended fund facility.

The central bank also raised interest rates by 200 basis points in an out-of-cycle meeting.

"The measures that the central bank took last week in hiking interest rates goes in the right direction. It is very important to control inflation," the director of the IMF's Middle East and Central Asia Department, Jihad Azour, told Reuters.

"The move to a flexible exchange rate will help the Egyptian economy to be protected from term-of-trade shocks as well as external shocks, especially at a time when global financial conditions have tightened and become more challenging," he said.

Egypt has been struggling to cope with the impact of the war in Ukraine, which led to rapid outflows of portfolio investments, a hike in the commodity import bill, and a drop in tourism revenues.

The IMF said on Thursday that a flexible exchange rate regime should be "a cornerstone policy" for rebuilding and safeguarding Egypt's external resilience.

It confirmed a staff-level agreement on a $3 billion, 46-month Extended Fund Facility.

It said the deal was expected to catalyst a large, multi-year financing package, including about $5 billion in the fiscal year ending June 2023, reflecting "broad international and regional support for Egypt."

Asked if there were assurances on assistance from wealthy Gulf states, Azour said: "Yes, and some of the Gulf authorities already issued statements in support of the program."

He said the $5 billion for FY2022-23 would be in addition to the extension of Gulf states' deposits in Egypt's central bank.

He said that any steps by Egypt that increase predictability and bring confidence back are welcomed and allow Egypt to cover its financing needs.

"We see that through these programs, there are enough financing assurances to cover their (Egypt's) external financing needs," he added.

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