IMF says review date for $3bn loan to Egypt not yet decided

Reuters/Johannes Christo

Egypt and the International Monetary Fund (IMF) have yet to agree on a date for the initial review under a $3 billion financial package signed in December, an IMF official said.

The fund in December approved a $3 billion extended facility loan for Egypt, which has been under acute financial pressure since long-standing problems were exposed by the economic fallout from the war in Ukraine.

Disbursements under the 46-month program are subject to eight reviews, the first of which was dated March 15, 2023, in an IMF staff report published in December.

“We are in regular dialogue with authorities in order to prepare for the first review and the first review preparations have started and when we and the authorities are ready we will announce the date of the first review,” Jihad Azour, director of the IMF’s Middle East and Central Asia Department, told a news conference.

He said that among priorities were for Egypt to adopt a flexible exchange rate, reduce inflation by using monetary policy instruments, especially interest rates, and open more space for the private sector by levelling the playing field with state companies.

“Egypt really needs to show some meaningful measures to rebuild confidence and show that the process has started,” said Monica Malik of ADCB. “It’s better to start the review once there is tangible signs of process with reforms, including on a flexible currency.”

The official Egyptian pound’s exchange rate has remained nearly unchanged for more than a month at about 30.93 to the dollar, despite a promise by the central bank in October to let supply and demand determine its price.

Banks and businesspeople continue to complain of a severe foreign currency shortage, and the pound’s price on the black market has fallen to about 36.00.

In its December accord with the IMF, Egypt also promised to sell state assets worth billions of dollars over the next four years.

It has made no major sales since the signing, though the central bank has raised its overnight interest rates by 500 basis points.

“Egypt has done important reforms over the last few years, and the fund has been very supportive,” Azouri said.

“We are still supportive of Egypt’s reform agenda,” he added.  

Last month the World Bank approved a new $7 billion partnership agreement with Egypt for 2023-2027 with a focus on boosting private sector jobs, provision of better health and education services and adaptation to climate change.

The country partnership agreement will entail $1 billion per year from the International Bank for Reconstruction and Development and about $2 billion over five years from the International Finance Corporation.