JUDITH MILLER
Last fall, Egypt was on the brink of economic collapse. A decade of debt-fueled spending on a pharaonic-scale had emptied its Central Bank coffers. By February, Cairo’s public debt was 89% of its gross domestic product. External debt had soared to 46% of GDP. The pound, its currency, was one of the world’s worst performing. Unable to import supplies and repatriate profits, foreign companies were leaving, or threatening to leave Egypt in droves. Annual inflation was over 35%, and double that for some food staples. Egypt seemed on the verge of a sovereign default—its first ever.
Then came Oct. 7.
Officials, businessmen, and financial analysts say that however horrific the war has been for Israelis and for Palestinians in Gaza, Oct. 7 has helped save Egypt from economic ruin and growing political unrest. To be sure, Egypt is paying heavily for the ongoing Israel-Hamas war on its border. Its three main sources of revenue—hard currency from the Suez Canal, tourism, and remittances from Egyptian workers abroad—have plummeted by between 30% and 40%. But without Hamas’ horrific massacre, which killed 1,200 people and took another 240 hostage, and Israel’s much criticized retaliation in Gaza, Egypt would probably not have gotten the international financial lifeline that has rescued it yet again from economic ruin, just in time.
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