IMF highlights importance of additional financing for Egypt's program successful

CAIRO - 14 January 2024: In a recent press briefing held by the International Monetary Fund (IMF), Director of Communications Julie Kozack emphasized the critical role of additional financing in ensuring the successful implementation of Egypt's economic program. The IMF's team is currently engaging in discussions with Egyptian authorities to support the completion of the first and second reviews of the Extended Fund Facility (EFF) that Egypt has with the Fund.

During a meeting between an Egyptian delegation and IMF Managing Director Kristalina Georgieva last week, Georgieva reaffirmed the IMF's commitment to being a strong partner to Egypt during these challenging times. Kozack noted that this meeting has facilitated significant progress in the ongoing discussions, and the IMF anticipates that the talks will continue in the following weeks to operationalize the key policy priorities.

"Our team is in discussions with the authorities on a set of policies that would support completion of the first and second reviews of the EFF that Egypt has with the Fund. This strong engagement that we've had with the authorities has helped achieve important progress in the discussions, and we do expect those discussions to continue in the coming weeks to operationalize the key policy priorities," said Kozack.

Among the policies under consideration are the tightening of monetary and fiscal measures, as well as a shift towards a flexible exchange rate system. Kozack explained that adopting a flexible exchange rate system would aid Egypt's commitment to reducing inflation and gradually transitioning to an inflation targeting regime.

Kozack acknowledged Egypt's already complex and challenging macroeconomic situation, which has been further compounded by the recent conflict between Israel and Gaza. The disruptions in the Red Sea and the impact on sectors such as tourism have had adverse effects on Egypt's economy.

"In addition to the complicated and challenging macroeconomic situation that Egypt already faces, the conflict between Israel and Gaza has further exacerbated the situation. We are seeing some effects on Egypt, particularly through disruptions in the Red Sea and in sectors that contribute to the current account, such as tourism," Kozack added.

In December 2022, the IMF's Executive Board approved a 46-month EFF for Egypt, amounting to approximately $3 billion. As part of this program, Egypt received an immediate disbursement of $347 million.