Economy Egypt announces first interest rate hike of 2024 By Pramod Kumar February 2, 2024, 4:54 AM Reuters/Shokry Hussien The International Monetary Fund and Egypt have agreed on the key policy elements of an economic reform programme The monetary policy committee (MPC) of Egypt’s central bank has raised its key policy rates by 200 basis points (bps), marking the first increase of 2024. The overnight deposit rate has now increased to 21.25 percent, the central bank said in a statement. Overnight lending and main operation rates stand at 22.25 percent and 21.75 percent, respectively. Egypt ends tax privileges for state enterprises Egypt plans UAE dirham bonds to lower funding costs Suez slump compounds Egypt’s foreign currency crisis “The MPC said that raising policy rates by 200 bps is warranted to anchor inflation expectations and set the policy rate at sufficiently restrictive levels to ensure a decelerating inflation trend,” the statement added. Annual headline and core inflation have continued to decelerate, reaching 33.7 percent and 34.2 percent in December 2023. However, recent developments indicate sustained inflationary pressures due to a rise in prices. The MPC will continue to monitor the balance of risks surrounding the inflation outlook to achieve price stability over the medium term. IMF-Egypt agreement The move comes as the International Monetary Fund (IMF) and Egypt have agreed on the key policy elements of an economic reform programme. The IMF and the Egyptian authorities made excellent progress on the discussions of a comprehensive policy package needed to reach a staff level agreement (SLA) for the combined first and second reviews of Egypt’s economic reform programme, IMF mission chief for Egypt Ivanna Vladkova Hollar said in a statement. The Egyptian government has expressed a “strong commitment” to act promptly on all critical aspects of Egypt’s economic reform programme, she added. AGBI reported that various Egyptian news outlets said Egypt had reached a staff-level agreement with the IMF for an extended fund facility (EFF) two or three times bigger than the existing deal. Al Borsa newspaper was among those reporting that a new deal could be announced “in hours or days”. Sources told Al Shorouk newspaper the new loan could be as high as $6 billion, while a report by news outlet Enterprise put the amount at $9 billion.
