The IMF intends to review Egypt’s situation as the wars continue around it economy

The Director of the International Monetary Fund, Kristalina Georgieva, said on Thursday that she will travel to Egypt within 10 days 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 the revenues from the Suez Canal, which is considered one of the most important sources of hard currency.

In March, Egypt signed an $8 billion financial support package with the IMF that obligated it to reduce subsidies on fuel, electricity, and other primary commodities and allow the exchange rate of the pound to be liberalized, measures that sparked popular anger, as Reuters reported earlier.

Georgieva said, “We were very open to modifying the Egyptian program or any other program to best serve the people…but let me say that we will not do what must be done for the sake of the country and the people of the country if we pretend that the measure that must be taken can be bypassed.”

Reevaluate

At the beginning of this week, Egyptian President Abdel Fattah El-Sisi warned that Egypt may have to re-evaluate its program with the International Monetary Fund if international institutions do not take into account the unusual regional challenges facing the country.

Last Friday, Egypt raised the prices of a wide range of fuel products for the third time this year, with diesel and gasoline prices increasing by between 11% and 17%.

In June, Egypt raised the price of subsidized bread by 300%, and Prime Minister Mostafa Madbouly said in July that fuel prices would gradually rise until the end of 2025.

Egypt lost between $6 to $7 billion in revenues during the past seven to ten months, and the situation may continue for at least another year, according to Sisi.

The Yemeni Houthi group’s attacks in the Red Sea forced ships to divert their course away from the Suez Canal, causing their revenues to fall to $870 million in the second quarter, compared to $2.54 billion in the same period last year.

Egyptian Prime Minister Mostafa Madbouly said this month that the Fund requested postponement of its fourth review of Egypt’s lending program until after its annual meetings, which are currently underway in Washington and end next Saturday.

At the end of last September, the Fund was scheduled to conduct a new review of the loan agreement concluded with Egypt, but the Fund postponed the review to a date that has not yet been determined, thus postponing Egypt’s obtaining a new tranche of the loan worth $1.2 billion.

According to the Fund, the most important economic reforms in Egypt include switching to a flexible exchange rate system, tightening monetary policy and public financial policy, slowing infrastructure spending to reduce inflation, and maintaining the sustainability of debt sustainability, while enhancing an environment that enables the private sector to carry out its activity. .