Skip to content Skip to Search
Skip navigation

IMF expects bigger loan deal for Egypt within weeks

Asked about reports the IMF loan could rise to $12bn, managing director Kristalina Georgieva said: 'There is nothing wrong in thinking big' Reuters/Carla Carniel 
Asked about reports the IMF loan could rise to $12bn, managing director Kristalina Georgieva said: 'There is nothing wrong in thinking big'
  • Funding may rise to $12bn
  • ‘Very encouraging signals’
  • Follows $35bn ADQ deal

The International Monetary Fund expects a financing package for Egypt to be finalised within weeks, its chief said on Tuesday – while also entertaining speculation that the loan could rise to $12 billion.

Speaking on the sidelines of a G20 finance meeting in Brazil, IMF managing director Kristalina Georgieva told Reuters that issues delaying the loan programme had been resolved, citing “very encouraging signals about Egypt’s views on dealing with heritage issues that had affected its competitiveness”.

Asked about reports that the planned loan of $3 billion could be increased to as much as $12 billion, Georgieva said: “You know, there is nothing wrong in thinking big.”

Her comments follow the announcement last weekend that Emirati sovereign wealth fund ADQ will invest $35 billion over the next two months to develop Ras El Hekma on Egypt’s north coast.

Georgieva called the planned investment “a very positive sign”.

Markets rallied on the news of the ADQ deal, with the Egyptian pound appreciating 25 percent on the parallel market and sovereign bond spreads narrowing by 200 basis points to 650 as fears of an Egyptian default decreased.

President Abdel Fattah El Sisi said on Wednesday that a portion of the funds promised by ADQ had arrived in the central bank.

The UAE’s investment could increase Egypt’s foreign exchange reserves to $60 billion, which would be an all-time high, according to research consultancy Capital Economics.

James Swanston, Mena economist at the London-based consultancy, said there has long been speculation Egypt hopes to build up a “war chest” of foreign currency before devaluing the pound against the dollar – a priority for the IMF.

The spike in reserves could raise the pressure on Cairo to implement a currency move, according to Swanston: “It may be the IMF says, ‘Now that you’ve got the money, do it.'”

Egypt and the IMF reached a staff-level agreement in October 2022 for a $3 billion extended fund facility.

Only $347 million has been released since then. The loan’s first review – scheduled for March 2023 – was postponed owing to concerns that Egypt had failed to meet its requirements.

Georgieva said on Tuesday that Egypt was facing challenges including a 55-60 percent decline in revenue from the Suez Canal, which previously generated $700 million a month.

In addition, the country was facing a slowdown in tourism and an influx of refugees from Somalia and Sudan.

“The stability of Egypt matters to Egypt, but it matters to the whole Middle East,” she added.

Following the outbreak of conflict in the Middle East last October, markets have been expecting the IMF to increase the size of any financial assistance to Egypt to help the country of 106 million people. Earlier this month, Goldman Sachs predicted a rise to $12 billion.

Latest articles

Over 400 global food brands are taking part in the SaudiFood Manufacturing show in Riyadh this month

Saudi Arabia’s food factory count rises to 1,300

The total number of food factories operated by the Saudi Authority for Industrial Cities and Technology Zones (Modon) has reached 1,300, across 36 cities. The increase signifies the growing capacity of the domestic food industry and its localisation efforts, the state-run Saudi Press Agency reported. Food industry companies have recorded a growth rate of more […]

Garden, Nature, Outdoors

UAE commits $50m to development fund

The UAE has committed $50 million to the second phase of the Lives and Livelihoods Fund 2.0 (LLF 2.0), a multi-donor initiative targeting sustainable economic development in the Islamic Development Bank’s (ISDB) 57 member countries. The funding will be deployed by LLF 2.0 to support critical projects in health and infectious diseases, agriculture, and social infrastructure in low […]

Abu Dhabi’s last debt market activity included a $2 billion bond in May 2021 followed by a further $3 billion in September

Abu Dhabi launches $5bn bond issue

Abu Dhabi has initiated $5 billion in a three-tranche bond after a hiatus of three years, according to a media report. The $1.75 billion five-year bond, $1.5 billion 10-year tranche and $1.75 billion 30-year issue was priced at 35, 45 and 90 basis points, respectively, over US Treasuries, fixed income news service IFR reported. Abu Dhabi […]

A square in Cairo

‘Worst is behind us’ in Egypt’s black market dollar war says BMI

The Egyptian government’s priority for 2024 should be to keep the gap between the official and parallel exchange rates for Egypt’s pound and the US dollar as narrow as possible, says BMI Research. In a webinar on Tuesday BMI, a Fitch Group firm specialised in country risk, said that “the worst is behind us” in […]