Egypt requests talks with IMF over new economic support program amid Ukraine crisis

CAIRO – 23 March 2022: Egypt has submitted a request to the International Monetary Fund (IMF) to start negotiations about a new program that seeks to support Egyptian state’s plans of national comprehensive economic reform, the Egyptian Cabinet said.

In a statement, the Cabinet said the program, which comes in light of the Russia-Ukraine crisis’s impact on global economy, may include additional funding for Egypt.

“The global economy, especially emerging economies, is currently exposed to simultaneous external shocks, represented by an unprecedented rise in the prices of goods and services and the high cost of financing in light of the fact that many global central banks have increased their interest rates to curb rising inflation,” Cabinet Spokesman Nader Saad said.

This is in addition to the significant negative economic repercussions of the Russian-Ukrainian crisis, which contributed to the presence of further rises in the prices of energy, food commodities and minerals, as well as the increasing state of uncertainty and panic among investors, which led to the decline or end of their investments from many emerging countries, Saad added.

“The Egyptian state’s priorities during the current period is represented in the rapid adoption of various policies and measures that guarantee the stability of the economic and financial conditions of the country,” Saad said.

The state’s priorities also include working on ensuring the availability of basic commodities for citizens in addition to announcing as well as implementing an integrated financial package of measures and procedures aimed at providing adequate support to the economic sectors and the groups most affected by simultaneous external shocks, Saad noted.

All authorities within the country will work to ensure the availability of production requirements and to continue providing aspects of support to the industrial, agricultural and export activities sectors, the spokesman affirmed.

Also, the Egyptian government aims to continue efforts to implement the necessary economic and structural reforms to ensure the preservation of the path of strong, balanced and sustainable economic growth, Saad said.

He added that this should be carried out in a manner that guarantees the achievement of comprehensive development in Egypt while seeking to increase the role of the private sector in all economic activities.

“To achieve this, the Egyptian state and its institutions continue to cooperate with all international partners and institutions to ensure consistency of policies and reforms followed with best international practices and experiences,” Saad said.

“Among those bodies is the International Monetary Fund, with which the Egyptian authorities have been in regular contact since the end of the previous program with it successfully with the aim of reaching a new agreement on a program of support and technical advice for the economic and financial policies pursued,” he added.

Egyptian pound depreciation

On Monday, the Egyptian pound depreciate by 14 percent, reaching LE 18.32 to the dollar by Wednesday.

The exchange rate of the US dollar against the Egyptian pound increased in most of the banks between 28-30 piasters after it was increased by LE 2.50 to LE 2.55 following a decision by the Central Bank of Egypt (CBE) to increase the interest rate by 1 percent.

At the National Bank of Egypt (NBE) and Banque Misr, the dollar rate increased to LE 18.43 for buying and LE 18.53 for selling against the previous price of trading, which hit LE 18.15 for buying and LE 18.25 for selling.

Former IMF cooperation

Over the past decade, Egypt has turned to the IMF several times, including borrowing $2.8 billion and $5.2 billion in May and June 2020 respectively as well as $12 billion in 2016.

Head of the International Monetary Fund (IMF) team in Egypt Celine Allard stressed Monday that Egypt has a strong capacity to repay its foreign currency obligations.

Egypt has moderate levels of foreign debts, compared other emerging economies, Allard told MENA during a virtual news briefing on the completion of the 2nd and final review of Egypt’s economic reform program supported by a 12-month Stand-By Arrangement (SBA) and the IMF Executive Board's discussions on the 2021 Article IV Consultation with Egypt