"Amid the current challenges, Egypt has applied to the International Monetary Fund to start talks between the two sides about a new programme to back the Egyptian state in its plans for comprehensive national economic reform," said a statement by the cabinet.
"The programme may include additional financing for Egypt," the statement added, quoting Nader Saad, the spokesman for the cabinet.
The cabinet's announcement was preceded by a statement by the IMF, in which it said its "staff is working closely with the authorities to prepare for program discussions with a view to supporting our shared goals of economic stability and sustainable, job-rich, and inclusive medium-term growth for Egypt."
The IMF said the changing global environment and spillovers related to the war in Ukraine are posing important challenges for countries around the world, including Egypt.
The Egyptian cabinet explained that the global economy, especially emerging economies, is currently facing simultaneous external shocks, which includes "unprecedented price uplifts for goods and services, and rising cost of financing as many global central banks have increased their interest rates to rein in the soaring inflation."
The Russia-Ukraine crisis has also contributed to further increasing the prices of energy, food commodities and minerals, Saad added, noting that the crisis also led to the decline and exit of investments in many emerging countries amid a state of uncertainty.
He underscored that Egypt's current priorities are focused on adopting measures and policies that ensure economic and financial stability and the availability basic commodities.
The Egyptian government is working on an integrated package of financial measures to support various economic sectors, and the groups hit hardest by the external shocks, Saad noted.
Responding to the ongoing economic developments, the Central Bank of Egypt raised on Monday the key interest rates by 1 percent (100 basic points) and hiked the US dollar price against the Egyptian pound by about 14 percent.
In addition, the Egyptian Ministry of Finance launched an incentives package worth EGP 130 billion to support social protection efforts.
The Egyptian authorities will keep pushing ahead with efforts to guarantee that all production requirements are available, and to continue to provide support for the industrial, agricultural and export activities sectors, Saad added.
"The Egyptian government – in parallel with this – aims during this period to press ahead with efforts to implement the necessary economic and structural reforms to ensure that the path of strong, balanced and sustainable economic growth is pursued," the cabinet's statement quoted Saad as saying.
The spokesman said the country, in order to achieve the aforementioned goal, will continue to cooperate with international development partners, including the IMF.
The IMF welcomed the recent actions by the Egyptian government. However, it stressed that "continued exchange rate flexibility will be essential to absorb external shocks and safeguard financial buffers during this uncertain time."
"Prudent fiscal and monetary policies will also be needed to preserve macroeconomic stability," it added.
In 2016, Egypt was given an IMF loan worth $12 billion for its economic reform programme that concluded in 2019. In 2020, Egypt also received two IMF loans worth about $8 billion to address the challenge posed by COVID-19.