Egypt expresses cautious optimism that the ceasefire between Israel and Hamas could lead to a recovery in Suez Canal revenue, which has dropped by at least 60% due to the conflict. The Suez Canal, a critical maritime trade route, has seen a significant decline in traffic since late 2023 when Yemen’s Houthi rebels began targeting Red Sea shipping in support of Hamas.

Impact on the Suez Canal

The six-week truce that began recently has raised hopes that the attacks will ease, although a full recovery of canal crossings is not expected to happen quickly. The return to normalcy for the Suez Canal is crucial for Egypt as it aims to recover from its worst economic crisis in decades. Last March, authorities allowed the currency to weaken by about 40%, securing fresh assistance from the International Monetary Fund (IMF) and others as part of a $57 billion global bailout.

Economic Implications

Since the ceasefire, the Houthis have indicated they will stop targeting US and UK ships. However, major shipping firms like A.P. Moller-Maersk A/S remain cautious about resuming operations. Egypt has reported that Red Sea disruptions cost the country at least $7 billion last year.

Investment and Recovery Strategies

Egypt’s investment minister, Hassan El Khatib, appointed in July, is part of the country’s efforts to attract foreign direct investment. Selling stakes in state assets to strategic investors or via the stock market is a major goal backed by the IMF. Egypt’s investor-friendly monetary policy, focusing on inflation targeting and a flexible exchange rate, is key to attracting investors.

Future Prospects

• Egypt expects to see at least three or four asset sales in the first half of 2025.
• The government aims to raise as much as $2.5 billion through these deals by the end of June.

Conclusion

The ceasefire between Israel and Hamas offers a glimmer of hope for the recovery of Suez Canal revenue. However, the path to full recovery will require careful planning and continued support from international investors and the IMF. Egypt’s strategic efforts to attract foreign direct investment and stabilize its economy will be crucial in this process.