Azour’s comments came in an answer to Ahram Online question on whether the IMF expects Egypt to apply further devaluation of the Egyptian pound against the US dollar before end of current FY2022/2023 that ends in June.

This took place during a press conference held on Wednesday in Dubai on the sidelines of the launch event of the IMF’s updated report on the Regional Economic Outlook for MENA and Central Asia regions.

Egypt is currently engaged in a $3 billion loan deal with the IMF over 46 months to address the repercussions of the Russian-Ukrainian conflict on the country’s economy.

Azour said that flexible both exchange rate and interest rates will also protect the Egyptian economy from the implications of external shocks

“Egypt has attained high growth rates over the past six years that averaged 5-6 percent and we think Egypt can restore these levels of economic growth,” Azour said.

Under the IMF-backed loan programme, Egypt pledged to adopt a flexible regimes for both exchange and interest rates, which means devaluating the local currency against the US dollar and raising interest rates to curb inflation.

Since March 2022, Egypt raised interest rates in successive moves by a total of 10 percent (1000 bps) and depreciated the local currency against the US dollar three times.

The US dollar is currently trading now for close to EGP 31 in banks and over EGP 36 in the parallel market, compared to trading at EGP 15 prior to the outbreak of the war in Ukraine.

Azour noted that one of the negative impacts of the war on Egypt was loss in tourism revenues, which exacerbated hard currency shortages in the country.

He added that the current IMF-backed loan deal for Egypt has a key mission to put the country’s economy on the track and to restore its high real GDP growth levels.

The programme, he said, will also help strengthen the fiscal position of the government, lower the budget deficit and move toward a budget surplus.

“The increase in Egypt’s debt and the budget deficit require the Egyptian economy to think differently and to be able to attract more of hard currencies through export sector. That will be reached through increasing the size of private investments and providing proper and equivalent opportunities for foreign and local investor’s alike, as well as feeding empowerment of the private sector not a competition,” Azour explained.

In an answer to a question from Ahram Online on the status of the first review of the loan, which was set to be conducted on 15 March, Azour explained that  the IMF’s discussions with the Egyptian authorities is ongoing with the aim of making sure that procedures designed in the programme will be met and completely fulfilled.

“Egypt needs to accelerate the pace of its reforms and provide more credibility and restore the confidence of other markets, which will allow the Egyptian economy to grow amid the ongoing uncertainty,” Azour stressed.

In this respect, Azour noted that disbursement of the loan tranches are linked to the application of set goals and not a specific timeframe.

Sudan crisis regional impact

On a regional level, Azour unveiled that the IMF has approved $25 billion in loans programmed for MENA region’s countries, including loans to Mauritania and Morocco.

Answering a question from Ahram Online on the potential impact of the conflict in Sudan on its neighbouring countries, including Egypt, Azour said that it is hard at present to assess the impact of the crisis in Sudan on other countries in the region, adding that this depends on the length and the scope of the conflict.

However, Azour noted that the influx of refugees who fled Sudan to other countries will affect the region’s economies and this must be addressed rapidly to contain all the risks of the conflict on the region.

Azour said that the situation in Sudan is regrettable, adding that the IMF has tried several times to help Sudan to tackle the problems it has been facing.

“We urge the country to conduct a diplomatic dialogue. The UN and other partners should enter a constructive dialogue with all the conflicting parties to tackle the risky situation there,” he added.

 “The IMF will continue monitoring the situation in Sudan and its developments," Azour said