IMF Approves $820 Million Disbursement to Egypt
The International Monetary Fund has given the green light for Egypt to receive approximately $820 million following the successful completion of the third review of the country’s extended arrangement.
Egypt’s Economic Challenges
In March, Egypt secured an expanded $8 billion support program from the IMF after facing economic setbacks due to the Gaza crisis. This crisis led to a decline in tourism and a significant decrease in revenue from the Suez Canal, caused by attacks on Red Sea shipping from Yemen.
EFF Arrangement and Progress
The deal was established under the Extended Fund Facility, designed to aid countries with long-term balance of payments issues stemming from structural problems. Egypt’s 46-month EFF arrangement was approved in December 2022.
While Egypt continues to battle high inflation, progress has been made in stabilizing the economy. The IMF emphasized the importance of maintaining a flexible exchange rate regime to support these efforts.
IMF’s Positive Assessment
Following the completion of the third review, improvements in macroeconomic conditions have been noted. Inflation is decreasing, foreign exchange shortages have been resolved, and fiscal targets have been met.
The IMF highlighted the positive impact these improvements have had on investor confidence and private sector sentiment in Egypt.
Focus on Structural Reforms
The IMF stressed the need for continued fiscal consolidation to manage public debt and enhance domestic revenue. Efforts to strengthen the financial sector, improve governance practices, and promote competition in the banking sector are essential for sustainable growth.
Minister of Finance’s Response
Egypt’s Minister of Finance, Ahmed Kojak, welcomed the IMF’s approval of the third review, stating that it reflects confidence in the government’s economic reform program and its ability to maintain stability.
Future Outlook and Challenges
Looking ahead, the IMF emphasized the importance of implementing structural reforms to support inclusive and sustainable growth. Addressing issues such as tax revenue, debt management, and energy sector balance are key priorities.
Despite progress, risks remain significant, including regional conflicts and trade disruptions in the Red Sea. The IMF underscored the need for prudent macroeconomic policies and continued structural reforms to ensure economic stability and growth.