“The rapidly changing global environment and spillovers related to the war in Ukraine are posing important challenges for countries around the world, including Egypt,” said the IMF’s mission chief for Egypt Celine Allard.

Allard added that a set of macroeconomic and structural policy measures would alleviate the impact of this shock on the Egyptian economy, protect the vulnerable, and keep Egypt’s resilience and medium-term growth prospects. 

“To this end, the authorities’ recent actions to expand targeted social protection and implement exchange rate flexibility are welcome steps. 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,” she further noted.

Allard expounded that the IMF is in discussions with Egyptian authorities for new programme with a view to supporting the shared goals of economic stability and sustainable, job-rich, and inclusive medium-term growth for Egypt.

Egypt is currently implementing its second wave of reforms, focusing on structural reforms across all the state's sectors.

In 2020, the IMF approved a request by Egypt for two loans to address the challenges posed by the COVID-19 pandemic.

The loans were disbursed under two programmes; the rapid finance instrument (RFI) and the Stand-by Arrangement (SBA) with a total amount of about $8 billion.

The RFI loan was an immediate one-tranche loan worth $2.7 billion, while the SBA loan was a one-year programme with a total of about $5.4 billion disbursed over two tranches and concluded in June 2021.

Egypt’s economic reform programme was designed and financed by the IMF under its extended fund facility (EFF) programme, which lasted for three years from 2016 through 2019.

The IMF funded the programme with a loan worth $12 billion.

In January, the IMF revised up Egypt’s real GDP growth by 0.4 percent in 2022 to 5.6 percent, compared to the fund’s October 2021 projections.

The Fund said that Egypt managed to do well amid the pandemic compared to oil-importer countries in the Middle East and North Africa region.

Responding to the ongoing economic updates, 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 Ministry of Finance launched an incentives package worth EGP 130 billion to support social protection efforts.