Economy

IMF to release $820m from Egypt $8bn loan programme

By Pramod Kumar

March 31, 2024, 6:14 AM

A container ship crosses the Gulf of Suez towards the Red Sea before entering the Suez Canal in Al-'Ain al-Sokhna, Egypt, in July — A container ship crosses the Gulf of Suez towards the Red Sea before entering the Suez Canal in Al-Ain Al-Sokhna in Egypt

Egypt will be able to immediately draw $820 million after the executive board of the International Monetary Fund (IMF) approved the expanded $8 billion financial support programme.

“Egypt is facing significant macroeconomic challenges that have become more complex to manage given the spillovers from the recent conflict in Gaza and Israel,” IMF chief Kristalina Georgieva said in a statement.

The disruptions in the Red Sea are reducing Suez Canal receipts, which are an important source of foreign exchange inflows and fiscal revenue, she added.

The IMF said all but one of the quantitative performance targets for the end of June 2023 were met, and a waiver request for non-observance of net international reserves criteria was approved.

In December 2022, Cairo struck a $3 billion, 46-month extended fund facility agreement with the IMF.

The IMF said economic growth in Egypt slowed to 3.8 percent in 2022-23 due to weak confidence and foreign exchange shortages and is projected to slow further to three percent in 2023-24 before recovering to about 4.5 percent in 2024-25.

Inflation remains high but is expected to ease over the medium term as the policy tightening takes hold, the Washington-headquartered fund added.

A $35 billion deal from a UAE-based investment and holding company in Ras El-Hekma has alleviated near-term balance of payment pressures and, if used judiciously, will help Egypt rebuild buffers to deal with future shocks.

In February, Egypt signed a deal with ADQ to build the “largest new city” in the country to promote tourism and drive economic growth.

The steadfast implementation of the economic policies under the programme remains critical to sustainably address Egypt’s macroeconomic challenges, as does robust delivery on structural reforms to allow the private sector to become the engine of growth, the IMF said.

Last month, Egypt received an $8 billion funding package from the European Union and a $6 billion loan from the World Bank.