The International Monetary Fund’s $8 billion program for Egypt is making progress, while the international body’s top regional official said any discussions to increase the overall size of the program are premature.
The IMF increased the size of its loan to Egypt to $8 billion from $3 billion last March, with the Central Bank announcing that it would allow the exchange rate to be liberalized amid the escalating risks of the effects resulting from the war between Israel and Gaza.
Egyptian President Abdel Fattah El-Sisi recently warned that the country may have to reevaluate its expanded loan program if international institutions do not take into account the unusual regional challenges the country faces.
Jihad Azour, director of the IMF’s Middle East and Central Asia Department, said – in response to a question about whether he was confident in Egypt’s ability to achieve the goals of its program – that economic conditions in Egypt are expected to improve and that it is too early to discuss any changes in the size of the program.
He added, “The program is moving in the right direction and is gradually achieving its goals, whether in terms of recovery in growth, gradual decline in inflation, or normal performance of the foreign exchange market.”
He explained, “Building or strengthening Egypt’s financial reserves is the first line of defense that can help the Egyptian economy withstand any additional external shock.”
Azour also expected that Egypt would save about $800 million over the next six years thanks to the recent reforms to the IMF’s fees and surcharge policy, which would provide additional support.
The IMF team on Egypt is scheduled to travel to Cairo in November to prepare for the third review of the program.
The Fund’s Director General, Kristalina Georgieva, also plans to visit Egypt to emphasize the Foundation’s support for the country.
This month, Georgieva said that she will travel to Egypt to closely examine the difficult economic situation in the country and stress the need to adhere to the implementation of reforms.
Georgieva indicated in a press conference that the Egyptian economy is facing challenges due to Israel’s war on Gaza and Lebanon and the war in Sudan, amid the loss of 70% of revenues from the Suez Canal, which is considered one of the most important sources of hard currency.
In its latest report on regional economic outlook, the IMF expects Egypt’s GDP to grow by 4.1% in 2025, compared to about 2.7% this year, and more than 5% in the medium term.
These forecasts are based on the assumption that Israel’s war on Gaza will subside next year and that the country will continue implementing reforms.
The inflation rate in Egyptian cities is expected to reach about 16% by the end of the 2024/25 fiscal year, which is much lower than about 40% in September of last year.
