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Egypt Signs New Expanded USD 8 Billion IMF Loan Agreement

March 6, 2024

Egypt announced on Wednesday that it had signed an expanded loan program with the International Monetary Fund (IMF), increasing an existing loan program by USD 5 billion.

The move came in conjunction with the Central Bank of Egypt’s (CBE) decision to allow the Egyptian pound to trade freely after months of tightly managed rates. The Egyptian Pound plummeted in value against the US Dollar by up to 60 percent following the CBE’s decision.

The expansion builds upon a USD 3 billion, 46-month Extended Fund Facility program reached in December 2022 between Egypt and the IMF,  which included provisions for a more flexible exchange rate. The program had faced delays due to Egypt maintaining a tight peg for its currency and slow progress on reforms to reduce the state’s economic role.

Prime Minister Mostafa Madbouly indicated Egypt will also receive a USD 1.2 billion loan from the IMF’s Resilience and Sustainability Trust to promote environmentally sustainable growth. This announcement follows a recent USD 35 billion investment deal for Ras Al-Hekma signed between Egypt and the Emirati fund ADQ.

The 2022 IMF agreement laid out structural reforms to create fairer competition between public and private sectors, along with monetary tightening, fiscal consolidation, and improved social safety nets. Egypt also committed to reduce subsidies and curb spending on President Abdel Fattah Al-Sisi’s ambitious infrastructure projects.

Egypt sought IMF support after economic fallout from the war in Ukraine caused foreign investors to withdraw USD 20 billion from the country within weeks. Increased risks stemming from the ongoing conflict in the Gaza Strip, particularly reduced revenue from the Suez Canal, add to Egypt’s economic difficulties.

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