JUST IN: IMF Grants $820n Support Package For Egypt Economy 

JUST IN: IMF Grants $820n Support Package For Egypt Economy 

The International Monetary Fund (IMF) recently announced the immediate disbursement of $820 million to the Egyptian government as part of an augmented plan aimed at supporting the nation’s struggling economy.

This disbursement, long-awaited by the Egyptian government, comes at a critical time where the country is facing mounting economic challenges.

The IMF’s Executive Board validated the payment as part of a $3 billion aid program granted at the end of 2022.

In addition to the $820 million disbursement, the IMF’s Board also approved a $5 billion extension earlier in the month, bringing the total lending to Egypt to $8 billion.

The IMF highlighted in a news release that the Egyptian government has met most of the objectives outlined in the initial stages of the aid program, with the exception of achieving the desired level of foreign currency reserves.

“The authorities have significantly strengthened the reform package,” IMF Managing Director Kristalina Georgieva said in the release.

“Recent measures toward correcting macroeconomic imbalances, including unification of the exchange rate… and significant tightening of monetary and fiscal policies, were difficult, but critical steps forward,” she added.

Recently, the Central Bank of Egypt raised interest rates by a significant six percentage points to 27.75 percent in an effort to combat inflation and narrow the gap between the official exchange rate and the black market rate.

This move led to a 40 percent decline in the value of the Egyptian pound in a single day, following a 50 percent drop over the past few months.

The economic challenges in Egypt are compounded by factors such as a significant portion of the population living near or below the poverty line, declining foreign currency earnings due to various factors like the impact of the pandemic on tourism, conflicts in regions vital for trade like the war in Ukraine and the Gaza Strip, and disruptions in the Suez Canal’s operations due to attacks in the Red Sea and Gulf of Aden.

President Abdel Fattah al-Sisi’s administration has undertaken large infrastructure projects since 2013, but these projects have not translated into substantial revenue generation and have strained the country’s financial resources.

Egypt’s foreign debt has surged from $46 billion in 2013 to over $165 billion in 2022, making it one of the countries most at risk of default, second only to war-torn Ukraine based on World Bank data.

Despite these challenges, the IMF remains cautiously optimistic about Egypt’s economic prospects for the upcoming fiscal year, forecasting a growth rate of 4.4 percent compared to the 3 percent projected for the current fiscal year ending on June 30th.

This assistance from the IMF is crucial for Egypt as it navigates through its economic challenges and seeks to stabilize and revitalize its economy.

Source: AFP