On 6 March, Egypt signed the long-awaited loan agreement with the International Monetary Fund (IMF), Prime Minister Mostafa Madbouly announced in a press conference.
The announcement came a few hours after the Central Bank of Egypt announced its decision to free the exchange rate against the Egyptian pound, leaving it to the market supply and demand. Dr Madbouly said that the government reached agreeable terms with the IMF.
He said that Egypt had succeeded in obtaining a USD20 billion dollar financing deal: USD8 billion from the IMF, and USD12 billion from the World Bank and the European Union.
Dr Madbouly explained that the government aims to promote the private sector’s contribution to the national economy, pointing out that a committee has been formed to control State public investments in order to offer more opportunities to the private sector.
The Prime Minister also pointed out during the press conference to the importance of supporting the social sectors most affected by the economic reform that should follow from the economic reform highlighted by the CBE’s higher interest rates and free trading of the Egyptian pound.
Speaking at the press conference was also Ivanna Vladkova Hollar who heads the IMF mission to Egypt. Ms Hollar said that IMF staff and Egyptian authorities reached staff level agreement on a set of comprehensive policies and reforms needed to complete the first and second reviews under the Extended Fund Facility (EFF) arrangement.
Ms Hollar said that key economic reforms taken by Egypt include a move to a flexible exchange rate system, tightening of monetary and fiscal policies, and a slowdown in infrastructure spending to reduce inflation, and preserve debt sustainability, while fostering an environment that enables private sector activity. These policies, she stressed, will help preserve macroeconomic stability, restore confidence, and allow Egypt to manage the challenges associated with recent external shocks.
The IMF published a comprehensive, fully informative statement on its loan to Egypt on its website:
https://www.imf.org/en/News/Articles/2024/03/06/pr-2459-egypt-staff-and-authorities-reach-agreement-on-reviews-under-the-eff-arrangement
Watani International
7 March 2024