The International Monetary Fund (IMF) has approved a total of $2.5 billion in assistance for Egypt, as part of the fourth revision of its economic reform program.
The IMF approved $2.5 billion in assistance to Egypt, of which $1.2 billion will be released immediately. To this end, the financial institution calls for a rebalancing of the economic model, emphasising the need to reduce the role of the state, establish fair competition rules, and improve governance to make the private sector a sustainable engine of inclusive growth.
The remaining $1.3 billion is part of the Resilience and Sustainability Facility (RSF), intended to finance projects related to the energy transition and the fight against the effects of climate change.
The RSF provides long-term loans with a grace period to strengthen countries’ capacity to manage environmental risks. The program will notably support decarbonization efforts and assessments of the climate impacts of investments.
The IMF did not specify the disbursement terms for this second tranche.
In its press release, the IMF praised Egypt’s economic policy, emphasising that “the authorities have continued their efforts to preserve macroeconomic stability, despite regional tensions and a sharp drop in Suez Canal revenues.”
This drop is estimated at $6 billion due to disruptions in the Red Sea.
Real GDP growth stood at around 3.5 percent in the first quarter of fiscal year 2024/2025, compared to 2.4 percent in the same period a year earlier. Inflation, which has been declining since September
2023, remains a challenge.
The IMF also noted that fiscal consolidation remains below expectations despite higher tax revenues, prompting the authorities to consider reducing spending for the second half of the year.
The institution welcomed the exchange rate liberalisation implemented in March 2024, which it considers essential to stabilise the foreign exchange market and stimulate the banking sector.
It encourages its continuation to strengthen confidence in the flexibility of the exchange rate regime.
SL/ac/Sf/fss/as/APA