IMF Approves Fresh Disbursement of USD 820 Million to Egypt

Following the third review of the International Monetary Fund’s (IMF) USD 8 billion loan programme to Egypt, the global financial body recently approved a USD 820 million reimbursement to the country. The decision signals the IMF’s confidence in the Egyptian government’s efforts to tackle key structural issues in its embattled economy.

“Strengthened reforms under the EFF-supported programme are yielding positive results,” Antoinette M. Sayeh, Deputy Managing Director and Acting Chair of the IMF, said in a statement. “The unification of the exchange rate and the accompanying monetary policy tightening have curtailed speculation, brought in foreign inflows, and moderated price growth. With signs of recovery in sentiment, private sector growth should be poised for a rebound.”

Despite praising progress in tackling inflation, addressing foreign exchange shortages and meeting fiscal targets, the IMF stressed that continued success will rely on further implementation of IMF-mandated reforms.

As part of the loan agreement, the Egyptian government has instituted a series of austerity measures. These include raising interest rates by the Central Bank of Egypt by 19% since March 2022, and the recent announcement of a fuel price increase by 10% to 15%.

Further economic growth, according to the IMF, will be driven by expanding public sector privatization to boost private sector competitiveness and streamlining business regulations to attract investment. In turn, a rebounded private sector and an ensuing boost in tax revenues are hoped to offset the impact of austerity by allowing more fiscally sustainable forms of social spending.

The IMF statement also acknowledged the continued implications of regional instability on Egypt’s economic recovery prospects. Crucially, attacks on Red Sea shipping since October 2023 have caused revenues from the Suez Canal to plunge, and the ongoing uncertainty surrounding the war in Gaza has deterred foreign investors.