Egyptian authorities could present contractors with settlement packages following the recent devaluation of the currency, says Waleed Abdel-Fattah, senior vice-president and Africa regional manager at the local office of the US Hill International.
We are expecting a hike in claims from contractors that signed contracts in the local currency, says Abdel-Fattah. With the currency devaluation, many contractors will be concerned with their initial pricing and the supply of key materials. This is something that happened before, shortly after the uprising in 2011, and the government at the time made widespread settlements.
He says that although the government will offer these settlements to contractors working on state projects, it is likely to set a precedent for the private sector and work as a guideline.
It is unclear when Cairo will offer such settlements, but local companies are expecting this to come soon as changes in foreign exchange (forex) policies begin to have an impact on those that have signed deals in Egyptian pounds.
Egypt has been struggling with a currency crisis rooted in the shortage of dollars available in the country. The Egyptian pound has been deemed overvalued for some time, which has prompted the central bank to undertake several devaluation steps in recent months.
On 14 March, the central bank devalued the currency by about 14 per cent in order to bring it closer to a fairer valuation. Analysts have suggested a more balanced rate is closer to £E10, the current trading value on the black market.
The devaluation has meant the importing of key materials has become more expensive.