The International Monetary Fund’s (IMF) Executive Board approved the third review of Egypt’s Extended Fund Facility (EFF) arrangement on 29 July, enabling a disbursement of approximately USD 820 million (EGP 39.6 billion) to Egypt.
“The Egyptian authorities’ recent efforts to restore macroeconomic stability have started to yield positive results. Inflation remains elevated but is coming down. A flexible exchange rate regime remains a cornerstone of the authorities’ program,” the organization explained.
Recent data indicates a positive shift in economic conditions, including reduced inflationary pressures and the elimination of foreign exchange shortages. These developments have begun to restore investor confidence and improve private sector outlooks.
Despite progress, the IMF also highlighted ongoing challenges, both regionally and domestically. The conflict in Gaza and Israel, as well as tensions in the Red Sea, pose significant external risks. Domestically, the Egyptian government still faces complex policy challenges, necessitating a continued strict adherence to reform commitments under the EFF.
The IMF emphasized the importance of maintaining a flexible exchange rate regime and a liberalized foreign exchange system to prevent external imbalances. The Central Bank of Egypt is urged to adopt a data-driven approach to reduce and stabilize inflation further.
The multilateral lender also called for accelerated structural reforms, including implementing the State Ownership Policy and promoting a fair competitive environment for private businesses.
Deputy Managing Director and Acting Chair Antoinette M. Sayeh underscored the need for structural reforms to foster inclusive and sustainable growth. These include boosting tax revenues, enhancing debt management, and ensuring the cost recovery of energy prices.
Sayeh also took note of the government’s recent efforts to sell state assets to private investors, specifically highlighting the Ras El-Hekma sale to the United Arab Emirates.
“The allocation of a portion of the financing from the Ras El-Hekma deal to reserve accumulation and debt reduction provides an additional cushion against shocks,” she said in the press release.
The IMF continues to exist as a significant presence in Egypt’s economic situation, having provided the government with several financial packages in the previous years.
Most recently, the two signed a USD 3 billion loan (EGP 68 billion at the time) agreement in October 2022, expanding to USD 8 billion (EGP 387.2 billion) in March 2022 in light of worsening economic standards due to regional conflicts affecting global markets.
Subscribe to the Egyptian Streets’ weekly newsletter! Catch up on the latest news, arts & culture headlines, exclusive features and more stories that matter, delivered straight to your inbox by clicking here.
Comment (1)
March 2023 !!!!