Georgieva said that Egypt, like so many members of the International Monetary Fund (IMF), has experienced extraordinary pressures that come from the shocks of the last years. Egypt’s high dependency on grain imports from war zones had a particularly adverse impact on the economy as well, according to Georgieva.
Georgieva’s remarks came in response to a question by Ahram Online on the current status of the first review of Egypt’s $3 billion Extended Fund Facility (EFF) loan programme. The review was supposed to be conducted on 15 March.
“We have agreed on a sound problem that has three critical elements. One, liberalising exchange rate. Two, increasing the opportunity for the private sector to deliver jobs and growth in Egypt. And three, moderate the long-term investment projects. Under the present circumstances these projects, which are otherwise very important and very good for Egypt, could undermine macroeconomic stability, especially if we take into consideration the speed at which these projects, which were originally conceived under different circumstances, were carried out”, Georgieva explained to Ahram Online.
Georgieva added that “We are now preparing to carry out the first review.”
“The teams are working, and I am confident that we would have a good outcome. I want to say that we have seen in Egypt a deeper understanding of the complexity of both the domestic and global environments”, noted Georgieva.
Once the first review is approved by the IMF’s Executive Board, Egypt will receive the second tranche of the loan worth $347 million. But the delay in conducting the first review indicates that the loan programme could extend beyond the originally planned duration of 46 months.
Ahram Online then questioned Georgieva on the debt crisis in developing countries, including Egypt. In response, Georgieva asserted that the IMF recognises that the lending landscape has changed dramatically, and that the debt resolution mechanism is no longer what it used to be.
“The role of nontraditional creditors has increased significantly along with the role of private finance. And yet, the only well-tuned mechanism for that resolution was the Paris Club”, Georgieva noted.
“So, if you have a small fraction of the debt covered and a big part of it not covered that obviously is not a healthy way to deal with the growing debt problem”, according to Georgieva.
Gerogieva said that the IMF is committed to supporting a more inclusive and effective debt resolution process. She added that dealing with the debt crisis required a common framework to tackle it.
“The G20 common framework is helping, but it is not yet a place where principals, policies, and processes can be defined. This is where our huge responsibility to our membership lies. Now we cannot command the creditors. But if we create a fair atmosphere for discussion, as we have done now, then the path to resolution of problems becomes clearer. Naturally, we will also finance,” Georgieva explained to Ahram Online.
According to the IMF’s Global Policy Agenda 2023 report, 21 countries received a total of $35.9 billion in financial assistance since 1 October 2022, including Egypt.
The report also stated that monetary policy must continue to prioritise a durable bringing down of inflation and guard against a de-anchoring of inflation expectations.
Given elevated uncertainty and risks, central banks must calibrate policies in a data-dependent manner, communicate their objectives clearly, and be ready to adjust and use their full set of policy instruments, including those dedicated to addressing financial stability concerns, the report urged.
It’s worth noting that an Egyptian delegation is currently attending the IMF’s and WBG’s spring meetings.
The delegation includes the Governor of the Central Bank of Egypt Hassan Abdullah, the Minister of Finance Mohamed Maait, and the Minister of International Cooperation Rania Al-Mashat