IMF completes Egypt’s EFF reviews, approves $5B loan extension

Updated 3/30/2024 3:16:00 AM

Arab Finance: The International Monetary Fund’s (IMF) Executive Board has completed the first and second reviews of the Extended Fund Facility (EFF) deal with Egypt as well as approved to extend the loan program with the country by $5 billion, the IMF announced in a press release.

Accordingly, Egyptian authorities can immediately draw around $820 million, equivalent to special drawing rights (SDR) of 618.1 million.

Moreover, the IMF pointed out that the geopolitical tensions have been challenging for Egypt, urging a “decisive domestic policy action” backed by a steady external financing package.

“Egypt is facing significant macroeconomic challenges that have become more complex to manage given the spillovers from the recent conflict in Gaza and Israel. The disruptions in the Red Sea are also reducing Suez Canal receipts, which are an important source of foreign exchange inflows and fiscal revenue,” Kristalina Georgieva, the IMF’s Managing Director and Chair, said.

The recently signed $35 billion investment deal between the UAE-based ADQ and Egypt for the development of Ras El-Hekma has mitigated the North African country’s payment pressures in the near term, the IMF stated.

If used rationally, the investment will assist Egypt to rebuild reserves and better handle future economic shocks, the international financial agency added.

“With policies to restore macroeconomic stability in place, the stage is set for accelerating implementation of the structural reform agenda intended to deliver inclusive and sustainable growth,” Georgieva highlighted.

“Withdrawing the state and military from economic activity and leveling the playing field between the public and private sectors is key to attracting foreign and domestic private investment in Egypt,” She added.

On December 16^th, 2022, the IMF approved the 46-month EFF arrangement for Egypt.