IMF concludes Egypt’s 1st, 2nd reviews

The International Monetary Fund (IMF) Executive Board has finished the initial and subsequent reviews of Egypt’s Extended Fund Facility (EFF) Arrangement, according to a report released on the IMF website.

The report indicates that the IMF approved a 46-month $3 billion EFF arrangement for Egypt in December 2022. However, policy delays and the return to a fixed exchange rate in February 2023 hampered programme execution, leading to FX shortages, inflation, and growth constraints. At the same time, the unrest in Gaza and disruptions in the Red Sea worsened external pressures.

The report reviewed measures taken by Egypt to reform the economy and restore stability to the market. It said that Egypt unified the exchange rate, tightened monetary policy, and committed to fiscal consolidation, to restore economic stability, in addition to raising gasoline prices and enhancing social protection.

The IMF said that the large development deal to develop Ras El Hekma eases external vulnerabilities, but an augmentation of the programme by $5 billion is sought due to external shocks.

Furthermore, the report identifies the risks that may hinder Egypt’s economic growth such as failure to sustain FX liberalisation, inflation, and regional conflicts.