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Egypt possibly in talks with IMF to boost loan to $5 billion

According to people familiar with the discussions, Egypt is aiming to increase its Extended Fund Facility (EFF) loan from $3 billion to $5 billion

By: Business Today Egypt

Sun, Oct. 15, 2023

Is Egypt looking to increase its loan from the International Monetary Fund (IMF)? Sources cited by Bloomberg stated that the government is in talks with the IMF, noting that the country is confident that it can address the issues related to the current package.

According to people familiar with the discussions, Egypt is aiming to increase its Extended Fund Facility (EFF) loan from $3 billion to $5 billion.

An announcement on the potential increase will only come after Egypt completes its two delayed program reviews, the news outlet cited sources as saying.

Egypt’s first two reviews continue to be unscheduled after several delays. However, Finance Minister, Mohamed Maait, has explained that Egypt expects new dates for the reviews to be announced before the end of October.

In a TV interview on Saturday, October 14, on the sidelines of the World Bank and IMF’s annual meetings in Morrocco, Maait also affirmed that Egypt is committed to implementing a flexible exchange rate policy, part of the IMF loan’s conditions.

An IMF mission might be passing by soon to begin the reviews around the end of October, according to Bloomberg’s sources. Several options are set to be discussed during the visit, including a path for reaching a staff-level agreement on the review, they said.

On Thursday, IMF’s Managing Director Kristalina Georgieva was quoted saying that “Egypt has made good progress on a number of fronts”. “Fiscal policy, the implementation of privatization strategy, the engagement with our team on how to best conduct monetary policy in these very challenging times,” she added.

IMF director for the Middle East, North Africa, and Central Asia, Jihad Azour, was quoted on a separate occasion during the Morrocco meetings, stating that the IMF and Egypt “are combining the first and the second review and when we get there, it means that strong progress has been achieved”.

Successfully passing the reviews would open up around $700 million in delayed loan tranches for Egypt, as well as potentially allowing access to a $1.3 billion Resilience and Sustainability Facility (RSF) and attracting fresh investments from partners in the Gulf.

The IMF recently approved a $1.3 billion RSF for Morrocco to support the country as it works on its climate vulnerabilities and enhance its resilience against climate change.