Egypt gets IMF’s initial nod for $1.2bn loan tranche

Reuters/Yuri Gripas

The International Monetary Fund (IMF) and Egypt have reached a staff-level agreement, paving the way for the release of $1.2 billion on the fourth review under its extended fund facility.

The loan disbursal, however, is subject to approval by the fund’s executive board.

“The Egyptian authorities have continued to implement key policies to preserve macroeconomic stability, despite ongoing regional tensions that are causing a sharp decline in Suez Canal receipts,” said IMF mission chief for Egypt Ivanna Vladkova Hollar.

In addition, an agreement was reached on the need to speed up reforms to improve the business environment and ensure that the private sector becomes the main engine of growth.

“More decisive efforts are needed to level the playing field, reduce the state footprint in the economy, and increase private sector confidence to help Egypt attract foreign investment and develop its full economic potential,” Hollar said.

Despite Egypt facing headwinds from the challenging external environment, the government has agreed to speed up efforts on the divestment programme to reduce the high debt burden.

The Central Bank of Egypt also reiterated its commitment to sustain a flexible exchange rate regime to buffer the economy from external shocks and maintain tight monetary conditions to further reduce inflationary pressures, Hollar said.

The apex bank will continue to modernise its operations to gradually transition toward a full-fledged inflation-targeting regime, Hollar said.

In March, Egypt secured an expanded $8 billion loan from the IMF after agreeing to implement a set of reforms and policies.

Cairo initially signed a $3 billion, 46-month extended fund facility agreement with the IMF in December 2022.