Egypt secures $820M IMF funding after key economic review
Traffic drives along a bridge spanning the river Nile, in Cairo, Egypt. (Photo by Shawn Baldwi via Bloomberg)
Egypt has successfully completed a crucial review of its expanded International Monetary Fund (IMF) loan program, unlocking $820 million in support.
Positive results from economic reforms
The IMF stated on Monday that “the Egyptian authorities’ recent efforts to restore macroeconomic stability have started to yield positive results.”
The statement followed the board’s ratification of a preliminary agreement reached last month, highlighting that fiscal targets, including those related to large infrastructure projects, have been met.
Cornerstones of global bailout
The IMF deal, combined with a substantial investment from the United Arab Emirates, forms the foundation of a $57 billion global bailout.
This offers Egypt, the Middle East’s most populous nation, a fresh start after two years of economic uncertainty.
In March, the IMF increased Egypt’s existing $3 billion loan deal to $8 billion, considering the impact of the Israel-Hamas conflict on Egypt’s key revenue streams, such as tourism and Suez Canal fees.
In its recent review, the IMF emphasized Egypt should continue focusing on reducing its deficit and providing targeted social spending.
The Egypt government has already begun implementing changes to subsidy programs used by the majority of Egypt’s 105 million-plus population, signaling a commitment to fiscal discipline.
Incremental price adjustments, flexible exchange rate regime
Last week, Egyptian authorities increased the prices of various fuel products by up to 15%, part of a series of incremental hikes set to continue until December 2025.
In June, the price of subsidized bread was raised for the first time in decades, and an increase in electricity tariffs is widely anticipated.
The IMF also reiterated the importance of maintaining a flexible exchange rate regime. In early March, just before the IMF deal was announced, the Egyptian pound lost nearly 40% of its value against the U.S. dollar.
The IMF noted that “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,” IMF maintained.
