IMF disburses $820 million to Egypt in effort to bolster economy
The International Monetary Fund (IMF) announces immediate $820 million financial assistance to Egypt’s government, part of $3 billion aid program approved at end of 2022
The International Monetary Fund (IMF) has taken a significant step towards bolstering Egypt’s struggling economy by announcing the immediate disbursement of $820 million to the Egyptian government. This financial assistance is part of a larger aid program, totaling $3 billion, which the IMF’s Executive Board approved at the close of 2022.
The decision, long anticipated by Egyptian authorities, comes at a critical juncture for the nation’s economy, which has been grappling with mounting challenges. The IMF’s Executive Board also greenlit a $5 billion extension earlier this month, bringing the total lending to Egypt from the Fund to a substantial $8 billion.
In a statement released by the IMF, Managing Director Kristalina Georgieva highlighted Egypt’s progress in meeting the targets outlined in the initial phases of the aid program. She commended the government’s efforts in implementing reforms, particularly in areas such as exchange rate unification and fiscal and monetary policy adjustments.
Recent measures undertaken by the Egyptian central bank, including a significant hike in interest rates to combat inflation and align the official exchange rate with the black market rate, have underscored the government’s commitment to stabilizing the economy. However, these moves have also led to a sharp devaluation of the Egyptian pound, exacerbating economic challenges for the population.
Egypt, with a population of approximately 106 million, faces a myriad of economic woes, including dwindling foreign currency earnings from key sectors such as tourism and disruptions to trade routes, notably the Suez Canal. Ongoing conflicts, such as the war in Ukraine and tensions in the Gaza Strip, have further compounded these challenges.
President Abdel Fattah al-Sisi’s ambitious infrastructure projects, initiated in 2013, have been scrutinized by economists, who argue that they have strained the country’s finances without yielding substantial revenue streams. Egypt’s foreign debt has soared from $46 billion to over $165 billion between 2013 and 2022, according to World Bank data, raising concerns about the nation’s fiscal stability.
Despite the hurdles, the IMF remains cautiously optimistic about Egypt’s economic prospects for the upcoming fiscal year, projecting a growth rate of 4.4 percent, compared to the current fiscal year’s 3 percent. The IMF’s continued support, coupled with ongoing reform efforts by the Egyptian government, aims to mitigate economic challenges and foster sustainable growth in the country.
Source: AFP
