Egypt is scheduled to receive an initial payment of $820 million this week (European News Agency)

Ivana Vladkova, an official at the International Monetary Fund, said on Monday that the next review of the Fund’s loan program for Egypt is scheduled to be completed by the end of next June, which is when the Egyptian authorities will be able to withdraw another $820 million, after agreeing last month to increase... Size of the loan program.

Review dates

The Fund's head of mission, Ivana Vladkova Hollar, said in a press conference that more reviews are scheduled to be completed every 6 months, and each of them will allow $1.3 billion to be disbursed.

Egyptian Prime Minister Mostafa Madbouly said that an initial payment of $820 million is scheduled to be received this week, after completing two reviews last month following delays.

Vladkova Hollar added that the next review will witness the discussion of an additional loan from the Fund’s Resilience and Sustainability Facility, and she explained that the final review of the loan program will take place in the last months of 2026.

She added that inflation expectations in Egypt will remain high in the near term, as inflation is expected to average 25.5% in the next fiscal year.

She said that the country - whose budget has been under great pressure in recent years - needs to replace untargeted fuel subsidies with targeted social spending.

International Monetary Fund Director Kristalina Georgieva and Egyptian Prime Minister Mostafa Madbouly (Egyptian Cabinet - Social Media)

consent

The International Monetary Fund said, in a statement last Friday, that Egypt obtained the approval of the Fund’s Executive Board to increase the extended financial support program to $8 billion, which allows the immediate withdrawal of about $820 million.

The Fund agreed to expand the scope of the agreement after Egypt's faltering economy was further damaged by the war on the

Gaza Strip, which slowed the growth of tourism and prompted the Houthi group in Yemen to launch attacks in the Red Sea, which led to a halving of

Suez Canal

revenues

, tourism and shipping, It is one of the main sources of foreign exchange in Egypt.

The IMF said in a statement, “The difficult external environment created by Russia’s war in Ukraine was subsequently exacerbated by the war in Gaza and Israel, as well as tensions in the Red Sea.”

The agreement, concluded in December 2022, expands the extended loan facility by $3 billion for a period of 46 months.

The agreement was suspended after Egypt did not adhere to its pledges to liberalize the currency exchange rate, accelerate the sale of state assets, and implement other reforms.

Extension of the agreement

The extension of the agreement was first announced on March 6, when the Central Bank of Egypt raised interest rates by 6 percentage points and allowed the value of the Egyptian pound to be devalued against the dollar.

“A strong economic stabilization plan is being implemented to correct policy errors, with a focus on liberalizing the foreign exchange system, tightening fiscal and monetary policy, reducing government investment, and providing more space for the private sector,” the fund said.

This will include continuing to reduce subsidies, which consume a large portion of government expenditures. Last week, Egypt raised the prices of a wide range of fuel products.

“It remains necessary to replace untargeted fuel subsidies with targeted social spending as part of a sustainable fuel price adjustment package,” the Fund said in its statement.

The Fund stated that Egypt had developed a new framework for monitoring and controlling public investment, which would help manage the increase in demand, but the state and the army would have to withdraw from economic activity.

International Monetary Fund headquarters (Getty)

“Integrating transparent off-budget investment into macroeconomic policy decision-making will be critical,” the Fund added.

Egypt is under pressure to cut spending on large public projects, especially the $60 billion New Capital project, which it is building in the desert east of Cairo.

Last month, Egypt agreed to sell the rights to develop prime land in Ras El Hekma on the Mediterranean coast to the UAE for $24 billion. During this month, Egypt also received financing pledges of $6 billion from the World Bank Group and $8.1 billion from the European Union. European.

The Fund's statement expected that the growth rate in Egypt would slow to 3% in the fiscal year, which ends in June 2024, from 3.8% in 2022-2023, before recovering to about 4.5% in 2024-2025.

Source: Agencies