The IMF loan has been augmented and increased to $8 billion instead of $3 billion “amid significant macroeconomic challenges that have become more complex to manage with the impact of the recent conflict in Gaza on tourism and Suez Canal receipts” the IMF statement read
The International Monetary Fund (IMF) and the Egyptian authorities have reached a staff-level agreement on a set of policies and reforms necessary to complete the first and second reviews under the Extended Fund Facility (EFF) arrangement.
The IMF loan has been augmented and increased to $8 billion instead of $3 billion “amid significant macroeconomic challenges that have become more complex to manage with the impact of the recent conflict in Gaza on tourism and Suez Canal receipts” the IMF statement read.
“The authorities are showing strong commitment to act promptly on all critical aspects of their economic reform program supported by the IMF. Policy discussions and program reforms revolved around six pillars,” The IMF mission Chief, Ivanna Vladkova Hollar, said.
The six pillars of the reform program include moving toward a credible flexible exchange rate regime, tightening monetary policy to reduce inflation and reverse dollarization, fiscal consolidation to preserve debt sustainability, slowing down infrastructure spending, providing adequate social spending for vulnerable groups, and implementing state ownership policy reforms to promote private sector growth.
Prime Minister Mostafa Madbouly announced the signing of the agreement between Egypt and the IMF during a press conference on Wednesday.
Madbouly also explained, in the press conference on Wednesday that Egypt will also receive $12 billion in soft loans from the World Bank and the European Union.
The announcement came hours after the Central Bank of Egypt’s decision to float the Egyptian pound (EGP) and raise the interest rates by 600 basis points.
The CBE raised the overnight deposit rate, the overnight lending rate, and the rate of the main operation by 600 basis points to reach 27.25%, 28.25%, and 27.75%, respectively. Additionally, the discount rate has been raised by 600 basis points to 27.75%.
