Brexit may leave negative impact on Egypt’s economy: IMF

Britain’s decision to leave the European Union may leave a negative impact on the Egyptian economy, according to an International Monetary Fund report released Wednesday.

The Egyptian stock Exchange has been the most negatively affected market in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) and Caucasus and Central Asia (CCA) regions, shedding 5 percent roughly during 23-26 June after the June 2016 UK referendum.

Currencies as well went lower on Brexit.  “Currencies weakened only marginally (by 1½ percent in Algeria, Kazakhstan, and Morocco, and by 5 percent in Georgia) and there was no significant impact on forward currency spreads in the GCC, which peg to the U.S. dollar”, Mubasher cited the IMF report.

The IMF expected the reliance of some banks in Bahrain, Egypt, Qatar, and the United Arab Emirates on wholesale borrowing from the United Kingdom to be an issue in the event of a spike in funding costs.

Moreover, countries with vulnerable fiscal position such as Egypt are likely to tap international markets in the upcoming months to finance their budget deficit, the IMF indicated.