Egypt seeks IMF assistance to meet economic challenges – Economy – Economy
“The rapidly changing global environment and the fallout from the war in Ukraine pose significant challenges for countries around the world, including Egypt,” said IMF mission chief for Egypt Céline Allard. .
Allard added that a set of macroeconomic and structural measures would mitigate the impact of this shock on the Egyptian economy, protect vulnerable people and maintain Egypt’s resilience and medium-term growth prospects.
“To this end, recent steps taken by the authorities to expand targeted social protection and implement exchange rate flexibility are welcome steps. Maintaining exchange rate flexibility will be essential to absorb external shocks and preserve financial buffers in this period of uncertainty. Prudent fiscal and monetary policies will also be needed to preserve macroeconomic stability,” she added.
Allard explained that the IMF is in discussions with the Egyptian authorities for a new program to support the common objectives of economic stability and sustainable, job-rich and inclusive medium-term growth for Egypt.
Egypt is currently implementing its second wave of reforms, focusing on structural reforms in all sectors of the state.
In 2020, the IMF approved a request from Egypt for two loans to address the challenges posed by the COVID-19 pandemic.
The loans were disbursed under two programs; the Rapid Financing Instrument (RFI) and Stand-By Arrangement (SBA) for a total amount of approximately $8 billion.
The RFI loan was a one-tranche immediate loan worth $2.7 billion, while the SBA loan was a one-year program with a total of approximately $5.4 billion disbursed in two tranches. and concluded in June 2021.
Egypt’s economic reform program was designed and financed by the IMF under its Extended Financing Facility (EFF) program, which ran for three years from 2016 to 2019.
The IMF financed the program with a loan worth $12 billion.
In January, the IMF revised up Egypt’s real GDP growth from 0.4% in 2022 to 5.6%, compared to the fund’s October 2021 projections.
The Fund said Egypt has managed to fare well amid the pandemic compared to oil-importing countries in the Middle East and North Africa region.
In response to ongoing economic updates, the Central Bank of Egypt on Monday raised policy interest rates by 1% (100 basis points) and raised the price of the US dollar against the Egyptian pound by approximately 14%.
In addition, the Ministry of Finance has launched an incentive package worth EGP 130 billion to support social protection efforts.