The Executive Board of the International Monetary Fund (IMF) completed the first and second reviews of Egypt’s Extended Fund Facility (EFF) on 29 March and augmented the arrangement, adding USD 5 billion (EGP 236.9 billion) to the original USD 3 billion (EGP 142.2 billion) plan, which allows Egypt to immediately withdraw around USD 820 million (EGP 38.9 billion)
According to a press release by the IMF, the Ras El-Hekma investment deal did ease some of the financial strains Egypt is facing, but “implementation of the economic policies under the program remains critical to address Egypt’s macroeconomic challenges.”
“The authorities’ commitment to use a large part of the new financing from the Ras El-Hekma deal to improve the level of reserves, fast-track the clearance of foreign currency backlogs and arrears, and reduce government debt upfront is prudent,” Kristalina Georgieva, the Director General of the IMF stated.
Egypt implemented a new framework to oversee and regulate public investments, which would aid in managing excess demand, according to the IMF.
“Integrating transparently off-budget investment into macroeconomic policy decision-making will be critical,” Georgieva highlighted.
Egypt’s economy has faced several challenges in recent months. The inflation rate was at an all-time high of 38 percent in September 2023, climbing down to 35.7 percent, as of February 2024. Additionally, there has been a shortage of foreign currency, and the Egyptian Pound faced a huge devaluation, jumping from EGP 30.89 to the dollar on 30 March 2023 to EGP 47.39 to the dollar today.
The conflict in Gaza, tensions on the Rafah crossing, as well as the war in Ukraine, which disrupted the Red Sea and Suez Canal’s revenue, have all added to the tension the Egyptian government has to deal with.
Egypt’s Prime Minister, Mostafa Madbouly, announced that the first installment of the IMF loan will be received next week. He confirmed, “Things will get better in the next period, and we are working very hard to continue on the reform paths.”
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