It is no longer a distant dream that the Egyptian pound will become robust again; the dream is supported by tangible economic indicators. These indicators include: increased cash flows, a rise in remittances from Egyptians working abroad, an influx of foreign direct investment, a revival in the tourism sector, and the return of the Suez Canal as a vital engine of growth.

This optimism comes at a time when Egypt faces global and regional challenges, but wise economic policies are putting the country on the path to recovery.

Increased cash flows are a strong driver of the economy

Predictions from financial institutions, such as Fitch Solutions and Goldman Sachs, show that Egypt will witness a surge in cash flows in 2025, with foreign exchange reserves rising to nearly USD 50 billion, compared to about $47 billion last year. This increase is the result of economic reforms that began years ago and culminated in the liberalisation of the exchange rate in March 2024. This contributed to narrowing the gap between the official market and the parallel market (or the black market, as Egyptians call it).

The $35 billion Ras El Hekma deal, concluded between Egypt and the UAE in February 2024, is a prominent example of these inflows, as it converted cash deposits into long-term investments, easing pressure on the pound and supporting its stability.

The International Monetary Fund's (IMF) support programmes, which included loans and reform recommendations, strengthened Egypt's ability to meet external obligations, paving the way for a currency recovery.

An unprecedented leap in remittances from Egyptians abroad

Remittances from Egyptians working abroad remain one of the strongest pillars of the Egyptian economy, as they constitute a major source of hard currency. These remittances increased by 51.3 percent in 2024, reaching approximately $29.6 billion, compared to approximately $19.5 billion in the previous year, 2023, according to data from the Central Bank of Egypt (CBE).

This coincides with expectations from Fitch Solutions that these remittances will reach $33 billion in 2025. The improvement in the economies of the Gulf States, which host millions of Egyptian workers, also contributed to this increase, along with the disappearance of the black market for currency after the liberalisation of the exchange rate. This prompted expatriates to use formal banks, and this development not only increased dollar liquidity but also reduced inflation resulting from currency fluctuations.

Foreign direct investment: a boost to confidence

Foreign direct investment (FDI) in Egypt is experiencing a remarkable resurgence, with the government targeting $15 billion in the current fiscal year. The Ras Al- Hikma deal is not the only example of such a deal. Saudi Arabia has announced plans to convert its $10.3 billion deposits at the Central Bank of Egypt into direct investments, boosting hard currency inflows.

The decline in external debt has prompted Fitch Ratings to raise Egypt's credit rating outlook to "positive" encouraging investors to invest more in infrastructure and renewable energy projects.

Tourism and momentum return

The tourism sector continues to be a major economic driving engine, with tourist numbers expected to grow by 15 percent in 2025. In the entire year 2024, Egyptian tourism revenues recorded about $15.3 billion, compared to $14 billion in 2023. The government is also working to promote tourist destinations such as Luxor, Aswan, and the North Coast.

The improved security situation, coupled with investments in tourism infrastructure, is enhancing the sector's ability to offset previous declines caused by geopolitical tensions. Therefore, it is supporting foreign exchange reserves.

The return of shipping traffic to the Suez Canal supports recovery

The Suez Canal, one of the world's most important waterways, is gradually recovering after the easing of tensions in the Red Sea. In 2023/24, the Suez Canal revenues fell to $7.9 billion due to regional unrest, but they are expected to rise to $10 billion in 2025 as shipping traffic returns to normal.

The government is also investing in developing the canal, including expanding its shipping lane. This will ensure it can accommodate increasing shipping volumes, thus boosting cash flows and supporting the stability of the Egyptian pound.

Photo: The Suez Canal supports the Egyptian recovery (by Adobe).