Economy

Egypt asks to join Brics to lessen dependency on dollar

June 16, 2023, 9:29 AM

Egyptian President Abdel Fattah al-Sisi — Egypt first expressed an interest in joining Brics in 2017 when President Abdul Fattah al-Sisi attended its annual summit

Brics considering shifting trade to move away from US dollar
Membership would give Egypt development opportunities
Saudi Arabia, UAE, Bahrain and Iran have also applied

Egypt has submitted an application to join the Brics group of large emerging market countries to develop trade ties and potentially reduce dependency on the US dollar, according to the Russian ambassador in Cairo.

Brics consists of Brazil, Russia, India, China, and South Africa.

“Egypt has submitted its application to join the Brics group because one of the endeavours that Brics is currently pursuing is to shift trade to alternative currencies,” Georgy Borisenko told Russian state news agency Tass on Wednesday.

The Brics countries are discussing the creation of a new reserve currency to reduce members’ dependence on the US dollar.

Egypt first expressed an interest in joining the group in 2017 when President Abdul Fattah al-Sisi attended the ninth annual summit at China’s invitation.

A report released by the Egyptian state information service following the event said that Egypt’s accession to Brics would create “many opportunities and advantages, especially in the field of development, trade and investment”.

In April the Brics group announced that it would begin accepting new members following its annual summit held in Cape Town on June 2-3.

In an interview with Bloomberg on April 24, South Africa’s ambassador to Brics said that 19 countries had already asked to join the group.

In addition to Egypt, these included the UAE, Saudi Arabia, Bahrain, Iran, Algeria, Argentina and Indonesia.

Egypt is in the grip of a long-running foreign exchange crisis. The US dollar currently fetches EGP 40 on the parallel market, around 30 percent higher than the official exchange rate.

Despite pressure from the IMF and its Gulf allies, Egypt is yet to make good on its commitment to move towards a flexible currency rate and continues to peg the pound to the US dollar.

In a speech on Wednesday Sisi appeared to rule out a devaluation in the near future, citing the pressures created by allowing inflation to rise further.

“We are flexible in the exchange rate, to be clear,” Sisi said. “But when the matter touches on Egypt’s national security, and the Egyptian people are lost? No. No, no, no.”

According to the Central Bank of Egypt, headline inflation for May reached 32.75 percent, just shy of the record reading of 32.95 percent reached in July 2017.