The International Monetary Fund (IMF) anticipates finalizing its upcoming review of Egypt’s $8bn loan program by the end of June 2024, according to IMF officials at a press conference today.
This review will pave the way for the disbursement of $820m to Egypt, said Ivanna Vladkova Hollar, IMF Mission Chief for Egypt and Division Chief at the Middle East and Central Asia Department.
Hollar, speaking to Daily News Egypt, revealed the IMF’s intention to develop a joint indicator to gauge the state and military’s retreat from commercial activity, promoting a level playing field for both public and private sectors.
In a significant development for Egypt, the IMF’s Executive Board greenlit a near $5bn increase to the loan program in December 2022, bringing the total value to $8bn from the initial $3bn. This approval followed an agreement reached on March 6th between the Egyptian government and the IMF, prompted by the Central Bank of Egypt’s devaluation of the Egyptian pound from EGP 30.9 to the US dollar to its current range of EGP 47.
Hollar outlined that reviews of the loan program for Egypt will occur biannually, starting from the fourth review to the eighth, with the final assessment scheduled for fall 2026.
The IMF also indicated that Egypt’s request for financing under the Resilience and Sustainability Facility (RSF) would be addressed during the next review. As announced earlier by Egyptian Prime Minister Mostafa Madbouly, Egypt intends to seek $1bn to $1.2bn in environmental sustainability financing.
The RSF is a long-term, low-cost lending facility designed by the IMF to support countries implementing reforms that mitigate risks to their external balance sheets, including those arising from climate change and pandemic preparedness.
Regarding Egyptian reforms, Hollar emphasized the importance of replacing untargeted fuel subsidies with targeted social spending programs.
On 22 March, the Egyptian government announced an increase in fuel prices by between 9-22%, citing rising global oil prices and the recent liberalization of the Egyptian pound’s exchange rate.
Regarding the capital inflows, the IMF said that they have increased in Egyptian on the back of the policies adopted by the authorities, indicating that they shouldn’t be used to peg the currency.
“Exchange rate liberalization should continue, and each review will consider forex market conditions in Egypt,” Hollar indicated.
Egypt’s external debt surged by around $3.51bn in the fourth quarter (Q4) of 2023, hitting $168.034bn, according to data from the Ministry of Planning and Economic Development.
This increase came after a drop of about $840m during the past two quarters of the current fiscal year (FY) 2023/24.
