In 2024, global shipping is fast, and Egypt's coffers, which depend on the Suez Canal, are getting thinner. The Suez Canal, Egypt's "cash cow", was indirectly affected by the unstable situation in the Red Sea, which led shipping companies to choose to detour, which affected the canal's revenue.
The chairman of the Suez Canal Authority, Osama Rabie, recently revealed that the canal's dollar revenues fell by 40% year-on-year from January 1 to 11, 2024. As the Red Sea crisis continues, the situation at the Suez Canal is likely to be even more dire. This change dealt a further blow to the already crisis-ridden Egyptian economy.
The Suez Canal, connecting the Red Sea and the Mediterranean, is the most important road connecting Europe and Asia, carrying 12% of the world's largest volume. But the Red Sea crisis has caused most shipping companies to take a detour to the Cape of Good Hope in Africa, reducing shipping through the Suez Canal. This change led to a sharp drop in Suez Canal toll revenues, adding additional pressure to the Egyptian economy.
Egypt's economy is already facing challenges on many fronts. Remittances, tourism, oil and Suez Canal tolls have been Egypt's main foreign exchange**, but these revenues** have all been challenged to varying degrees in recent years. For example, the continued depreciation of the Egyptian pound and the rise of international food, coupled with the instability of international shipping, have had an impact on the Egyptian economy.
Recently, global rating agency Moody's downgraded Egypt's credit rating outlook from stable to negative. This reflects growing concerns about the deterioration of credit conditions in Egypt. Moody's noted that the sharp rise in interest payments and intensifying external pressures have complicated Egypt's macroeconomic adjustment process.
Despite the risk of bankruptcy, the international community, including the United States and the International Monetary Fund (IMF), may not allow Egypt to default on its debts, given its strategic and political importance. Joshua M., director of the Center for Middle East Studies at the University of OklahomaLandis) said Egypt's importance means that the international community is likely to provide the necessary support to prevent a complete collapse of its economy.