Georgieva: The deterioration of the situation was not due to Egypt’s fault, but rather resulted from an external shock (Reuters)

International Monetary Fund Director Kristalina Georgieva said - today, Tuesday - that the Fund has succeeded in resolving the basic issues with the Egyptian authorities regarding its review of a loan program with Egypt worth $3 billion.

She added that an additional financing package is expected to be finalized within weeks.

During an interview on the sidelines of a G20 financial meeting in Brazil, Georgieva refrained from specifying the size of the increase that Egypt can expect in this loan, and said that the details are still being prepared.

She explained that the discussions were “very constructive” and that there were “very encouraging signs” regarding Egypt’s perspective on dealing with issues that had previously affected its competitiveness.

In response to a question about media reports that indicated that the IMF may increase the size of Egypt’s loan of $3 billion to $12 billion, Georgieva said, “It is not a mistake to be ambitious.”

Georgieva told Reuters - during the interview - that "the possibility of increasing the loan already exists," pointing to the additional challenges facing Egypt, due to Israel's war on Gaza

and

the disruption of navigation in the Red Sea

.

She continued, "The deterioration of the situation was not due to Egypt's fault, but rather resulted from an external shock."

Last January, the IMF reduced Egypt's growth expectations for the current year by 0.6 percentage points to 3%.

Traffic decline in Suez

Georgieva pointed out that traffic in the Suez Canal - which previously generated revenues amounting to $700 million per month for Egypt - decreased between 55 and 60%, in addition to the decline in tourism.

She added that Egypt has already been facing an influx of refugees from Somalia and Sudan for some time, and added, "Egypt's stability is important to it, but it is also important to the entire Middle East."

She considered that Egypt's announcement - last Friday - of a $35 billion investment from the Emirates to develop one of the best areas of its coast on the Mediterranean Sea is a "very positive sign," in reference to the "Ras El Hekma" joint investment deal with the Emirates.

Georgieva explained that the International Monetary Fund will also take into account financing flows from other sources to fill the financing gap in Egypt.

She added that she expected the program reviews to be completed within these days, but the Fund wanted to give the Egyptian authorities time to "gain confidence that all elements of support are in place."

The international official concluded, "Now there is hope that the reviews will be completed by the month of Ramadan... Let's see where we reach. But I expect (the reviews) to be completed within weeks. I can say with confidence now, we have complete agreement on the main issues."

Source: Reuters