KEY POINTS
- IMF to start its review of Egypt’s loan program, which may unlock $1.2 billion in financing.
- Discussions to focus on Egypt’s economic targets and sustainability efforts.
- Egyptian President al-Sisi urges reassessment of loan program due to regional challenges.
The International Monetary Fund (IMF) will start its review of Egypt’s loan program on Tuesday, with the possibility of unlocking over $1.2 billion in financing.
This review forms part of the 46-month IMF loan agreement only at a time when Egypt is experiencing an economic crisis typified by high inflation and acute foreign currency scarcity.
The current review is the fourth under the loan program, which was expanded earlier this year to $8 billion, reflecting the scale of Egypt’s economic challenges.
Egyptian PM, Mostafa Madbouly said at a press conference with IMF director Kristalina Georgieva that Egypt is confident in the continued partnership with the IMF. “I believe that we will record all the successful and effective cooperation in the future in the near future,” He stated.
IMF cooperation and global challenges
Georgieva commended the partnership with Egypt, adding that talks would cover Egypt’s objectives to shift to a greener economy in addition to the loan program.
The nation’s access to the Resilience and Sustainability Facility (RSF), which has the potential to unleash an extra $1 billion in finance, is part of this endeavor.
Since 2022, Egypt has been attempting to obtain RSF money in the goal of bolstering its environmental sustainability initiatives. Egypt’s economic pledges and advancements toward these goals will be evaluated by the IMF assessment.
President Sisi’s call for reassessment
Amid these developments, Egyptian President Abdel Fattah al-Sisi recently urged international institutions to consider the unique challenges the region faces, suggesting that Egypt’s expanded loan program might need reassessment.
Accoding to Reuters, Madbouly echoed these sentiments, stating that recent talks with the IMF were more focused on reevaluating Egypt’s targets and timelines rather than seeking additional financing.
In July, following the IMF’s third review, the organization acknowledged improvements in inflationary pressures and the elimination of foreign exchange shortages.
However, it emphasized the need for further reforms, including accelerating the divestment of state-owned enterprises and improving competition within the economy.
Economic outlook and reforms ahead
The loan program is essential in solving Egypt’s ongoing problems of finance and development, but it is not without price liberty.
In its recent report the IMF has called on Egypt to continue its fiscal reforms and concentrate on eradicating distortions in the Egyptian economy.
Indeed when the review process starts much emphasis will be on how these reforms have been accomplished by Egypt with special focus on private sector and government spending on infrastructures.
The next few weeks offer a decisive moment for Egypt, which must negotiate a new tranche of funding from the IMF while grappling with a host economy’s challenges in the early stages of recovery.
Another internal factor is the global economic environment which enter with inflation and changing consumption pattern that will also influence the future direction of Egypt.
