Egypt, IMF, merge loan reviews, anticipate 2023 schedule

Country received in December $347 mn installment from $3 bn loan program
Egypt, IMF, merge loan reviews, anticipate 2023 schedule
Egypt and the IMF (Photo from Misr News Agency)

As per a Reuters report, Egypt and the International Monetary Fund (IMF) have reached an agreement to combine the postponed first and second reviews of Egypt’s $3 billion loan. The news agency stated that an official statement confirmed the merger, with both the IMF and Egypt anticipating a scheduled date for the reviews before the end of 2023. Various news outlets previously reported on the delay, citing different sources.

Initially planned for March 2023, the first review of Egypt’s Extended Fund Facility (EEF) loan was delayed by the IMF. The second review, initially set for this month, was also postponed. The IMF expressed concerns regarding Egypt’s progress in meeting the crucial conditions of the loan, leading to the review postponements.

In December 2022, Egypt received the first installment of the Extended Fund Facility (EEF) loan, amounting to $347 million. The loan program, spanning 46 months and totaling $3 billion, was designed to be disbursed in eight installments following bi-annual reviews.

Under the loan agreement, Egypt has undertaken several measures to fulfill its obligations. These include the implementation of a fully flexible exchange rate, enhancing the participation of the private sector in the economy, and expediting the IPO program and privatization reforms. Egypt has been making significant strides to meet these commitments and has been actively accelerating its efforts in this regard.

Following the onset of the Russo-Ukraine war in March 2022, the exchange rate between the Egyptian pound and the dollar has experienced a decline. Initially at EGP 15.7 to the dollar, the Egyptian pound depreciated to EGP 18.56 in March 2022. Subsequently, since March 2023, the exchange rate has further weakened, with the Egyptian pound currently hovering around the EGP 30 mark.

Egypt IMF
The Central Bank of Egypt (Photo from Reuters)

Unchanged rates

On September 21, Egypt’s Central Bank decided to maintain its key overnight interest rates unchanged on Thursday. The bank cited a slowdown in both economic growth and core inflation as the rationale behind this decision. Consequently, the lending rate was kept at 20.25 percent, while the deposit rate remained at 19.25 percent. 

Read more: Egyptian economy makes modest gains amid high inflation

Record inflation surge

In August, the annual urban consumer price inflation rate surged to a record 37.4 percent, up from 36.5 percent in July, which was also a record, as reported by the statistics agency CAPMAS last week.

However, core inflation, which excludes volatile items, fell to 40.4 percent in August from 40.7 percent in July and a record 41.0 percent in June.

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