Egypt is considering a return to the barter system for trade with several countries to alleviate the pressure on hard currency, according to Sherif al-Gabaly, Head of the Environmental Compliance and Sustainable Development Office at the Federation of Egyptian Industries. This potential move is currently under study, taking into account the active involvement of the private sector in today’s market, a factor that distinguishes the current situation from previous practices.
Gabaly highlighted that Egypt had previously employed a barter system during the Soviet Union era, engaging in equal deals where, for instance, citrus fruits were exported in exchange for equipment and machinery. The goal was to reduce reliance on foreign currency reserves. Although bartering has resurfaced among merchants without government intervention, implementing this system at the governmental level necessitates a legal framework, involving multiple parties and counterparts in the corresponding country. However, some countries might be hesitant to adopt this approach due to their dependence on hard currency.
Notably, Gabaly pointed out that the BRICS group is exploring the possibility of the barter system, particularly for goods with substantial import bills. This alternative approach involves exchanging goods instead of relying on foreign currency, reflecting a potential shift in international trade dynamics.
The success of the barter system, as emphasized by Gabaly, relies on the evaluation of currencies by the central banks of the countries involved and the assessed value of the goods to be exchanged. He suggested that this system could find success within Africa, citing issues related to common currencies on the continent as a contributing factor.
In summary, Egypt’s contemplation of a return to the barter system for trade is prompted by the desire to ease the demand on hard currency. The current evaluation is taking into account the evolved dynamics of the market, with the private sector playing a more active role. While the idea draws from historical practices, its success at the governmental level hinges on legal frameworks and the willingness of participating countries, with potential implications for international trade dynamics, especially within the BRICS group and Africa.