ISMAILIA, Egypt — As Russia’s war on Ukraine continues to pressure Egypt’s economic and financial health, Cairo has turned to the Suez Canal to help it navigate the crisis. The strategic waterway, one of the world’s most crucial maritime arteries, represents a key source of foreign currency for Egypt.

During the economic setback of the coronavirus pandemic, the Suez Canal turned out to be one of the few rays of light for Egypt, and thanks to its flexible marketing policy, which included measures such as discounts for some vessels, the canal achieved revenues of $6.3 billion in 2021, the highest in its history. Now, Egypt's external financial vulnerabilities are under increasing pressure from the impact of the Russia-Ukraine conflict on tourism, food, oil prices and even the bond market. Against this backdrop, the Suez Canal Authority (SCA) has announced a significant increase in its transit fees to try to boost its revenues.

“Suez Canal receipts accounted for around 7.4% of total current account receipts over the first three quarters of 2021. Given that the Russia-Ukraine war has weakened the outlook for tourism receipts substantially and contributed to a reversal in capital inflows, the Egyptian government is likely trying to increase sources of other foreign currency,” Callee Davis, economist at Oxford Economics Africa, told Al-Monitor.

“However, it is unlikely that a tariff hike will completely offset reduced earnings from these forex sources considering the importance of tourism receipts and portfolio inflows,” he added.