Egypt to set 2016-17 budget at devalued exchange rate
A man hold U.S. dollars - REUTERS/Beawi Harta

CAIRO: Egypt is preparing its 2016-2017 budget on the basis of an exchange rate of 8.25 Egyptian pounds to the dollar, as compared to 7.75 pounds the previous year, two government sources told Reuters on Monday.

The most populous Arab state, which depends on imports for its food and energy, is facing a foreign currency crisis and authorities are under increasing pressure to devalue the pound.

The proposed value of the pound in the budget being drafted indicates the Central Bank of Egypt is planning to devalue the pound from the official rate of 7.7301 to the dollar. The CBE could not immediately be reached for comment.

“The government has begun preparing the state budget in accordance to an exchange rate of 8.25 Egyptian pounds to the dollar versus 7.75 pounds in the 2015-2016 proposed budget,” one of the government sources told Reuters.

Egypt has been starved of foreign currency since a popular uprising in 2011 ousted autocrat Hosni Mubarak and drove tourists and foreign investors away.

Its foreign currency reserves have tumbled from $36 billion in 2011 to $16.4 billion, and the country has been rationing dollars through the weekly dollar auctions to banks, keeping the pound artificially strong.

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