The International Monetary Fund (IMF) is urging Egypt to implement more of the promised reforms before conducting the first review of the $3 billion rescue package, Bloomberg reported.
Disbursements under the 46-month program are subject to eight reviews, the first of which was dated 15 March 2023, but it has yet to take place. According to a recent IMF statement, the lender is holding off until it sees more progress from Cairo to ensure the review is successful.
The Fund said its discussions with Egypt will continue virtually towards starting its first review mission.
Discussions between the IMF and Egypt were “fruitful” in preparation for the review, the statement added.
This review is necessary for Egypt to access the second tranche of its loan worth around $354 million.
The stall comes amid a series of statements suggesting frustration with Cairo’s willingness to carry out reforms and concerns over the health of Egypt’s economy.
Some of these reforms include privatizing certain state-owned assets, allowing for a flexible exchange rate, and selling stakes in dozens of state-owned companies.
The IMF has emphasized the importance of these reforms to promote growth, protect Egypt’s economy from external shocks, and create more foreign currencies.
In a press conference on Thursday, Jihad Azour, the IMF’s director for the Middle East, North Africa, and Central Asia, said that “the flexibility of the exchange rate is the best way for Egypt to protect its economy from external shocks.”
The IMF’s managing director, Kristalina Georgieva, said on the same day that the fund was preparing to carry out the review, without giving a timeline. “The teams are working and I am confident that we will have a good outcome,” she told reporters.
Read more: Inflation woes mount for Egypt as currency further drops
Cairo has committed to these reforms as part of the IMF agreement, but the IMF is urging the government to implement them fully before conducting the first review of the rescue package.
Despite support from Gulf allies, including Saudi Arabia and Qatar, billions of dollars in pledged investments have yet to materialize. Egypt’s economy has been hit hard by rising oil and food prices due to the aftermath of the COVID-19 pandemic and the war in Ukraine, with about one-third of the population living in poverty.
Egypt has been grappling with high inflation rates in recent years due to a variety of factors, including currency fluctuations, and rising food prices. The government has implemented various measures to curb inflation, such as reducing subsidies on fuel and electricity, but the issue continues to pose a significant challenge for the country.
Last week, the Central Agency for Public Mobilization and Statistics (CAPMAS) revealed Egypt’s annual inflation rate reached its highest level ever in March, rising to 33.9% from 32.9% in February.
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