Kristalina Georgieva and Mostafa Madbouly during their meeting in Egypt (social media)

Cairo -

Egypt's discussions with the International Monetary Fund have clearly become closely related to developments in the war on the Gaza Strip, and perhaps one of the main reasons driving it after its suspension.

Due to the failure to reach an agreement between the two parties on the mechanism for implementing the economic program.

This close connection, according to observers and activists, appeared on two levels:

The first was with the first weeks of the beginning of the war and talk about a possible increase in the loan program as a result of the economic difficulties resulting from this war.

The second is the need to provide “comprehensive support” to help Egypt deal with the pressures imposed by the refugee issue from Gaza.

The continued linking of the IMF’s discussions with Egypt to the war on the Gaza Strip has raised broad questions about the significance of linking the economic aid program at times to the repercussions of the war on Egypt, and at other times to the pressures posed by the possibility of receiving refugees from Gaza.

Urgent |

Reuters, citing the International Monetary Fund: We are working closely with Egypt to ensure that it is not exposed to any excess financial needs related to potential refugees from Gaza #Al Jazeera_Live

- Al Jazeera Live (@ajmubasher) February 22, 2024

In the context of talking about the storming of the Palestinian city of


, which is densely populated and displaced, Egyptian Foreign Minister Sameh Shoukry affirmed, during a discussion session at the Munich Security Conference last week, that “displacement operations constitute a threat to Egyptian national security and pressure on relations with Egypt.”

But he referred to the fait accompli policy, saying: “We have no intention of providing safe areas for the displaced, but if a fait accompli is imposed on us, we will deal with the situation and provide humanitarian support, but this is not a justification for imposing a fait accompli.”

Linking the Fund’s program to the war on Gaza

Linking the IMF program with Egypt to the war on Gaza began early, in the second half of November 2023, when Fund Director Kristalina Georgieva said that the Fund was “seriously studying” a possible increase in the loan program for Egypt amounting to $3 billion as a result of the economic difficulties resulting from the war. Israel on Gaza.

Georgieva pointed out, during press statements, the difficulties posed by the war on neighboring countries, such as Egypt, Lebanon and Jordan, through losses in tourism revenues and high energy costs.

Before the outbreak of the war on the Gaza Strip, the International Monetary Fund warned that Egypt - which is the Fund's second largest borrower - would "bleed" its precious reserves unless it devalued its currency again.

Over time, talk about Egypt's discussions with the IMF about the aid program became inseparable from developments in the war in Gaza, as the Fund's spokeswoman, Julie Cusack, indicated last Thursday explicitly that there was a need to provide "comprehensive support" to help Cairo deal with the pressures. Which is imposed by the issue of asylum from Gaza due to the war waged by Israel on the Strip.

She said, "There is a need for a very comprehensive support package for Egypt, and we are working closely with both the Egyptian authorities and their partners to ensure that Egypt does not have any remaining financing needs and also to ensure that the program is able to achieve macroeconomic and financial stability in Egypt."

According to the Fund, an agreement has not yet been reached;

But he indicated that he agreed with the Egyptian authorities on the main elements in amending the program within the framework of the first and second reviews that were combined for Egypt’s current loan amounting to $3 billion, and he said that “the authorities expressed a strong commitment” to it, without revealing the details of the Egyptian package because the negotiations are not... It's still going on.

The agreement on the faltering program between Egypt and the Fund dates back to the end of December 2022, when the latter agreed to provide $3 billion to Egypt, which is under strong financial pressure, while conducting 8 reviews of its reform programs, the first of which was scheduled for March 2023. But it didn't happen.

Controversial statements

These statements were not lost on social media, and some wondered about the relationship of the increased amount of funding to Egypt to the issue of receiving Palestinian refugees on its lands, despite Cairo’s announcement of its categorical rejection of the Israeli displacement plan.

Egyptian political science professor Ahmed Abd Rabbo, in a tweet on the “X” website, described the fund’s talk that it “works to ensure that Egypt does not incur financial burdens in dealing with potential refugees from Gaza” as an extremely dangerous statement, he said.

The International Monetary Fund says it is working closely with Egypt to ensure that it is not exposed to any excess financial needs associated with potential refugees from the Gaza Strip.


How beautiful are these potential refugees?

And new

- I hope God forgives (@EmaarW) February 22, 2024

Egyptian banishment

Later, an official source for a local channel affiliated with the regime denied, without naming him, the Fund’s statements regarding the existence of additional support due to the Gaza war.

The channel quoted the source as saying, “There is no truth to what was reported about discussions between the Egyptian government and the IMF about additional financial needs for Egypt due to the war on Gaza,” without any other details.

Some considered that such statements were aimed at harming Egypt, and were nothing more than rumours, as they said.

Commenting on the issue, political economy researcher Mustafa Youssef says, “There is a direct relationship between the increase in the IMF loan to the repercussions of the war on the Gaza Strip and the Ras al-Hikma deal on the northern coast worth $35 billion between Egypt and the Emirates.”

He explained to Al Jazeera Net that the IMF has been stressing over the past few months the direct impact of the war in Gaza on Egypt from several directions.

Suez Canal revenues, tourism, and direct investments, but the recent statements regarding potential displaced people make us add a new reason, and no one knows for certain whether there is an agreement or consensus on this reason between Cairo and the IMF or not.

He expected the fund to release the two suspended tranches and increase the rescue package before the month of Ramadan, especially after the announcement of the Ras al-Hikma deal and the arrival of billions of dollars in dollar flows within two months.

This allows the Egyptian government to take the step of devaluing the pound again and hedge against any speculation on the dollar again.

Part of the signing ceremony of the Ras El Hekma deal between Egypt and the UAE (Egyptian Press)

Big breakthrough

In this context, Egyptian Prime Minister Mostafa Madbouly said in a statement last Thursday that the government is currently working to complete the agreement with the IMF, and is continuing its procedures approved by the state ownership policy document.

The International Monetary Fund says that it and Egypt are in the “final stage” of negotiations to increase the loan program, and that they have agreed on the main policy elements of the economic reform program within the discussions aimed at reaching a final agreement to increase the country’s loan, without disclosing the size of the increase.

Egypt is witnessing an economic and financial crisis that is evident in the rise in the debt service bill to about 42.3 billion dollars during the year 2024, which is the highest bill ever required to be paid in one year, after the country’s external debt jumped to about 164.5 billion dollars, with a cash reserve not exceeding 35.2 billion dollars. Billion dollar.

The Central Bank kept the exchange rate of the pound against the dollar for about a year at 30.85 pounds, in violation of the previous agreement with the IMF to adopt a flexible exchange rate, but it was more flexible on the black market.

It is trading at the level of 50 pounds after touching 71 pounds before Egypt announced a huge deal with the UAE regarding the city of Ras El Hekma on the northern coast a few days ago, worth $35 billion.

Source: Al Jazeera