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IMF urges Egypt to expand private sector after loan release

The IMF's Antoinette Sayeh said Egypt's 'private sector growth should be poised for a rebound' Reuters
The IMF's Antoinette Sayeh said Egypt's 'private sector growth should be poised for a rebound'
  • IMF releases $820m
  • Praised Egypt’s efforts
  • Calls for private sector growth

The International Monetary Fund completed a third review of Egypt’s extended fund facility on Monday, allowing government authorities to draw the equivalent of $820 million.

Disbursement of the funds will mean that $1.64 billion of the total $8 billion loan has been received since it was agreed in March.

The IMF praised the Egyptian government’s “recent efforts to restore macroeconomic stability”, particularly its moves towards a flexible exchange rate, which it called “a cornerstone of the authorities’ programme”.



The fund also credited a steady drop in the inflation rate, which slipped to 27.5 percent in June, the tightening of monetary policy, and the elimination of foreign exchange shortages for increased private sector and investment confidence in Egypt. 

However, the IMF called for greater efforts to implement Egypt’s State Ownership Policy, a presidential plan laid out in late 2022 to decrease the state’s share of the economy and increase participation of the private sector.

In a statement, deputy managing director Antoinette Sayeh said “strengthened reforms under the extended fund facility-supported programme are yielding positive results” and that “private sector growth should be poised for a rebound”.

She called on the government to boost tax revenue and bring down Egypt’s debt burden to allow for productive public spending. She also stressed the need to cut energy subsidies to support “the smooth provision of energy to the population and reduce imbalances in the sector”.

Egypt announced hikes in subsidised fuel prices on Thursday in a move widely linked to yesterday’s board review. Prices for diesel, kerosene and other petroleum products were raised by at least 10 percent, with petrol prices at the pump jumping 15 percent.

Sayeh also warned that “regional conflicts and uncertainty about the duration of disruption of trade in the Red Sea are important sources of external risk” for the immediate future.

Egypt’s medium term economic outlook was transformed in February with the signing of a $35 billion deal with Abu Dhabi sovereign wealth fund ADQ to develop Ras El Hekma on the north coast.

The deal, which included $24 billion of fresh dollar investment, has allowed Egypt to build up record high reserves of foreign currency.

The president of the UAE, Sheikh Mohammed bin Zayed Al Nahyan, arrived in El Alamein on Monday for a multi-day visit. During his stay, he will hold talks with with President Abdel Fattah El Sisi and other top officials.

Egyptian state information services said their discussions would cover “economic investments, regional stability and security concerns, as well as exploring new avenues for cooperation”.