Facing a protracted currency crisis as a result of the Russian invasion of Ukraine last year, Egypt has announced that effective immediately it will begin charging foreign cruise ships frequenting Egyptian ports in US dollars.

The announcement was made as part of a bundle of new regulations issued by Minister of Transport Kamel Al-Wazir to combat a range of challenges stemming from the currency crisis, including a backlog of goods held by customs in Egypt’s ports.

As per the new regulations, foreign cruise ships will be granted a discount of up to 50% of the shipping agency fees and 50% of the fees for using the fixed and floating utilities affiliated with the Egyptian Authority for Maritime Safety.

Cruise ships transiting the Suez Canal are a major source of foreign revenue for Egypt

Egypt has been facing a currency crisis since the Russian invasion of Ukraine last year, with US dollars in short supply and is being reviewed by the International Monetary Fund on how its economy is faring after the bank extended a US $3 billion facility to Cairo last year, linked to carrying out structural reforms.

Foremost among these is a genuinely flexible foreign exchange regime, something that analysts say is not being thoroughly implemented.

This, in turn, is perpetuating the dollar shortage in the country, allowing a backlog of imports estimated at about US $4 billion to grow even bigger and undermine local industries dependent on foreign materials.

In December, Egyptian banks announced they would provide the required dollars to clear a backlog of goods piled up at ports due to the shortage of hard currency since the beginning of 2022.

On December 25th, the Egyptian government announced the release of around $5 billion worth of goods from ports during the period from December 1st to 23rd.

Egyptian President Abdel Fattah El-Sisi has insisted the government will not reduce spending on national projects to ease pressure on US dollar reserves, and has refrained from raising electricity tariffs for factories to avoid transferring the increase to the prices of goods in the market.

He added that efforts had been exerted to ensure a steady supply of fertilizers in the local market at affordable prices.

Egypt’s currency crisis began in 2020 with the outbreak of the COVID-19 pandemic when companies and institutions all over the world began to hoard dollars in response to fears about the coronavirus.

It was further compounded in 2022 when Russia invaded Ukraine, driving up oil and food prices and undermining investor confidence. Egypt is not alone in its US dollar shortage, the primary currency used to pay for imports.

Eight other African countries are facing similar currency crises, but they dont have the advantage of Egypt, which controls the Suez Canal and can earn US dollars from the more than 17,000 ships that transit it every year, including several hundred cruise ship transits.