The International Monetary Fund (IMF) announced on Wednesday that Egypt has requested support from the IMF toward implementing Egypt’s comprehensive economic program amid ongoing global challenges.
According to Celine Allard, the IMF’s mission chief for Egypt, the rapidly changing global environment and spillovers from the Ukraine war pose a number of challenges for countries around the world, including Egypt.
He did not reveal details of Egypt’s request.
Allard said macroeconomic and structural policies could mitigate this shock’s impact on the Egyptian economy, protect the vulnerable, and maintain Egypt’s growth prospects on the medium term.
She said, “To this end, the authorities’ recent actions to expand targeted social protection and implement exchange rate flexibility are welcome steps. Continued exchange rate flexibility will be essential to absorb external shocks and safeguard financial buffers during this uncertain time. Prudent fiscal and monetary policies will also be needed to preserve macroeconomic stability.”
Moreover, Allard explained that the IMF is in discussion with Egyptian authorities for a new programme to support Egypt’s goals of economic stability, job creation, and medium-term inclusive growth.
Egypt is currently implementing its second round of reforms, aimed at structural changes across all sectors of the economy.
Egypt requested two IMF loans in 2020 to address the challenges posed by the COVID-19 pandemic.
Approximately $8 billion was disbursed under two programs, the rapid finance instrument (RFI) and the stand-by arrangement (SBA).
The RFI loan totalled $2.7 billion in one tranche, while the SBA loan was disbursed in two tranches over a period of one year and was concluded in 2021.
The IMF designed and funded Egypt’s economic reform program, which lasted for three years between 2016 and 2019.
A $12 billion loan was provided by the IMF for the programme.
Egypt’s GDP growth in 2022 was revised up by 0.4 per cent to 5.6 per cent by the IMF in January, compared to the fund’s October 2021 projections.
According to the Fund, Egypt fared better than other oil-importing countries in the region during the pandemic.
The Central Bank of Egypt hiked on Monday the key interest rates by 1 per cent (100 basic points) and the US dollar price against the Egyptian pound by about 14 per cent in response to the ongoing economic updates.
A package of incentives worth EGP 130 billion was also launched by the Ministry of Finance to support social protection efforts.