Egypt’s economic landscape is set for a transformation as the International Monetary Fund (IMF) ties substantial financial support to the country’s commitment to market-driven currency policies. The $8 billion financial program which Egypt signed on March 6 aims to bolster the country’s economy through reforms and foreign exchange availability.
Under the IMF agreement, Egypt will have immediate access to $820 million this week. Moreover, it will receive another $820 million after a review by the end of June. Subsequent IMF reviews, occurring every six months, will unlock payments of $1.3 billion each, subject to meeting specific conditions. The final payment is scheduled for autumn 2026, mission chief Ivanna Vladkova Hollar recently stated.
Crisis response
The IMF’s support builds upon a prior $3 billion extended fund facility that Egypt agreed to in December 2022. It came following the regional crisis that shook Egypt’s already uncertain economy. Initially, Egypt freed its currency following the 2022 deal. However, within months, it had re-pegged its currency to the dollar. This prompted the IMF to put the program on hold.
Central to the IMF agreement is Egypt’s commitment to letting market conditions determine the value of its currency. The IMF reiterated the importance of sustaining this reform in the long term.
In addition to currency policies, the IMF is advocating for reforms that foster a level playing field between private and state-owned enterprises. Reducing the state’s role in the economy is also a key objective.
Read: Middle East economy remains robust despite oil cuts, geopolitical turbulence: Report
Resilience and sustainability
Further discussions within the IMF program may lead to additional funding through the resilience and sustainability facility, contingent upon Egypt’s commitment to addressing climate change and implementing robust environmental policies.
Egypt continues to grapple with high inflation rates, though the IMF expects inflation to fall to 15.25 percent from the current 35 percent by the end of the year. Regarding the country’s budget, the IMF suggests that Egypt needs to replace untargeted fuel subsidies with targeted spending to ensure support reaches households in need.
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