“Financial tightening, high debt, and frequent, wide-ranging lockdowns in China—causing further bottlenecks in global supply chains—are additional dark clouds weighing on the global economy” - IMF MD
The anticipated loan from the International Monetary Fund (IMF) to Egypt will support the country’s social protection system amid rising food and energy prices on the back of the Russian war in Ukraine, explained IMF managing director Kristalina Georgieva at one of the annual IMF/World Bank meetings yesterday.
Egypt’s economic conditions are getting worse, she commented during her opening remarks, citing ongoing overlapping crises, including the war in Ukraine, the already existing impacts of COVID, and rising commodity prices.
IMF’s Deputy Director of the Fiscal Affairs Department, Paolo Mauro, agreed, stating that the global rise in food prices, as well as supply chain disruptions, is a major challenge for the country. Egypt is a major importer of foodstuffs.
Discussions for the loan began in late March, after the state reached out to the IMF for additional funding for Egypt to absorb shocks to the economy. Finance Minister Mohamed Maait stated that the expected program would target preserving the country’s gains from the previous economic reform program.
Talking about the loan, Mauro confirmed the ongoing discussions with the IMF, noting that it will pave the way for the country to receive a fresh loan that is expected to mitigate the severe impacts of the Russian-Ukrainian conflict and preserve the country’s gains from the first wave of reforms.
“We had a very successful experience with Egypt in previous programs. The new program will focus to protect the country’s economy against the ongoing setbacks caused by the war in Ukraine and to insure a vital social protection in the country,” Georgieva said.
The IMF’s forecast for Egypt’s GDP is optimistic, revising its latest projection for this fiscal year to 5.9%, slightly higher than the Egyptian state’s own predication of 5.7%.
Related > EBRD drops expectations for Egypt’s real GDP growth to 3.1%
The conflict in Russia and Ukraine continue to be a major topic and challenge; accelerating inflation, increasing food and fuel prices, explained IMF’s MD, all amidst an already turbulent few years affected by COVID-19 and continued global supply chain disruptions.
“Financial tightening, high debt, and frequent, wide-ranging lockdowns in China—causing further bottlenecks in global supply chains—are additional dark clouds weighing on the global economy,” she further expounded.
“Our immediate hope must be for the war to end—that would have the single most positive effect on the global recovery right now,” Georgieva said.
