PM says IMF talks in final stages; sources say IMF is looking to unify Egypt’s interest rates

Egypt and IMF talks are seeing “very, very good progress” said Prime Minister Mostafa Madbouly to Al-Arabiya, noting in a separate statement that the two are in the “final stages” of discussions for a fresh batch of funding to support the economy. The statement did not include details about the ongoing discussions.

Egypt reached out to the International Monetary Fund (IMF) back in March to request financial support in light of the Russian/Ukrainian conflict’s impact on the economy and rising inflation rates. In April, IMF Managing Director Kristalina Georgieva stated that the loan would support the country’s social protection system amid rising food and energy prices, explaining that Egypt’s economic conditions were already impacted by overlapping crises.

In late July, the IMF called on Egypt to be more “decisive” on fiscal and structural reforms to “boost the economy’s competitiveness, improve governance, and strengthen its resilience against shocks”.

According to three government sources cited by Bloomberg Asharq, the IMF has asked the Central Bank of Egypt (CBE) to “unify interest rates” in the banking sector by canceling all subsidized, low-interest initiatives.

These would include low-cost loans to small and medium enterprises (SMEs), and the tourism and agriculture sectors, which are funded by the central bank, distributed via state-owned banks, and guaranteed by the Finance Ministry.

Over the past six years, the state has launched several initiatives with low-interest financing to support key sectors; the tourism sector enjoys a subsidized interest rate of up to 8%; small projects have an interest rate of 5%; medium-sized projects, as well as the industrial and agricultural sectors receive an interest rate of 8%; and real estate financing activities with an interest rate ranging between 3% for low-income housing and 8% for middle-income housing.