IMF, Egyptian authorities make progress on fourth EFF review

CAIRO – 21 November 2024: An International Monetary Fund (IMF) mission, led by Ivanna Vladkova Hollar, concluded in-person discussions with Egyptian authorities in Cairo on November 20. 

The talks focused on the fourth review under the Extended Fund Facility (EFF), Article IV consultations, and additional reform measures to mitigate climate-related risks as part of Egypt’s request for access to the Resilience and Sustainability Facility (RSF).

In a statement issued at the end of the visit, Vladkova Hollar highlighted substantial progress in the policy discussions but underscored the challenging regional economic context. Geopolitical tensions, including the war on Gaza, along with disruptions in Red Sea trade routes, have significantly impacted Egypt's economy. 

She noted that the Suez Canal, a key foreign currency source, saw revenue drops of up to 70 percent. The influx of refugees is further straining public services, particularly in health and education sectors, she added.

According to the IMF, Egypt has implemented key reforms to stabilize its economy despite these pressures.

Hollar noted that the unification of the exchange rate since March has eased FX demand and imports, while substantial monetary tightening has curbed inflationary pressures. However, inflation remains a concern, requiring sustained efforts to bring it in line with medium-term targets.

Fiscal discipline has also contributed to reducing public debt vulnerabilities, but further actions are needed to mobilize domestic revenues, mitigate fiscal risks—particularly in the energy sector—and expand social safety nets.

The IMF commended Egypt's plans to streamline taxes, enhance customs procedures, and facilitate trade, urging authorities to accelerate divestment plans and reduce the state’s role in the economy to foster private sector growth. The mission also stressed the importance of strengthening conditional cash transfer programs to protect vulnerable groups from rising living costs and energy prices.

Discussions between the IMF and Egyptian authorities will continue in the coming days to finalize policies and reforms necessary to complete the fourth EFF review.