During the meeting, the IMF is expected to approve a $3 billion loan for Egypt under the fund’s Extended Fund Facility (EFF).
A preliminary staff-level agreement between Egypt and the fund was reached in October to back the country’s new economic reform programme meant to address the repercussions of the Russian-Ukrainian conflict.
In November, Egypt downgraded its projections for its real GDP growth for the second time since the onset of the war in Ukraine to five percent in current FY2022/2023, down from 5.5 percent expected in March, when the war broke out.
The IMF’s new loan for Egypt is a part of a total of $9 billion financing Egypt is anticipated to obtain from international and regional development partners, with additional financing of about $6 billion expected from those partners for the current FY2022/2023, which is predicted to strengthen Egypt’s external position amid the ongoing challenges.
On Monday, Minister of Finance Mohamed Maait stated that Egypt hopes to receive the first tranche of the 46-month programme loan in December with a value of $750 million.
By securing this loan, Egypt will have obtained a total of over $23 billion in loans from the IMF over the past seven years.
Between 2016 and 2019, Egypt secured three loans from the IMF worth $12 billion to back the country’s first wave of economic reforms.
During the COVID-19 pandemic, Egypt secured two loans from the IMF under the Rapid Finance Instrument (RFI) and the Stand-By Arrangement (SBA) with a total exceeding $8 billion.
Egypt’s fresh IMF-backed economic reform programme aims to unlock Egypt’s enormous growth potential through broadening and deepening structural and governance reforms. The program will include policies to unleash private sector growth including by reducing the state’s footprint, adopting a more robust competition framework, enhancing transparency and ensuring improved trade facilitation.
Under the programme, Egypt plans to expand targeted social transfers and enhance spending on social assistance, health and education.
The IMF says that these reform measures will be critical to address long-standing constraints to Egypt’s higher, more sustainable and more inclusive growth.
In October, the IMF revised up its projections for Egypt’s real GDP growth in 2022 to 6.6 percent up, from 5.9 percent it had expected in July, yet lowered it for 2023 to 4.4 percent down from 4.8 percent, according the fund’s World Economic Outlook report.
The fund also raised the country’s expected inflation to 13.1 percent in 2022, up from 8.7 percent it predicted in April, while decreasing its projections in 2023 to 9.2 percent, down from 14 percent.
As initial steps taken under the programme, the Central Bank of Egypt hiked the key interest rates by two percent in October. It also terminated its the low-interest initiatives for industrial, agricultural and construction sectors, while transferring their management – for the current beneficiaries – to the Ministry of Finance.