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Egypt has started dimming the lights at landmarks in Cairo as it seeks to sell more gas to energy-starved Europe and get more revenue amid an economic crisis.
In the capital Cairo, the lights at the Tahrir square are dimmed, and lighting is being reduced on some streets, government buildings, and shops at night, The Wall Street Journal reports.
Since the beginning of the Russian invasion of Ukraine, Egypt, like many other countries in Africa, has felt the rising inflation. At the same time, a stronger U.S. dollar has diminished the power of its local currency to pay for imports.
Egypt, however, has gas, and by reducing the use of gas for domestic power production, the country is redirecting more LNG to Europe, which has been paying top dollar this year to get all the gas it can before the winter.
Egypt could help Europe with its higher deliveries of gas, but it will also receive foreign currency for its LNG exports, much needed in the North African economy battered by the war in Ukraine right after a Covid-induced recession.
So now Egypt is looking to reduce by 15% the volume of natural gas it uses for power generation and send to Europe the gas it has saved domestically.
Last month, the International Monetary Fund (IMF) agreed to extend a fund facility arrangement of $3 billion, which “aims to safeguard macroeconomic stability and debt sustainability, improve Egypt’s resilience to external shocks, strengthen the social safety net, and step-up reforms that underpin higher private-sector-led growth and job creation.”
The agreement is subject to approval by the IMF’s Executive Board, which is expected to discuss the authorities’ request in December.
“The Central Bank of Egypt (CBE)’s move to a flexible exchange rate regime is a significant and welcome step to unwind external imbalances, boost Egypt’s competitiveness, and attract foreign direct investment. The commitment to durable exchange rate flexibility going forward will be a cornerstone policy for rebuilding and safeguarding Egypt’s external resilience over the long term,” the IMF said in October.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.