File Photo: Egypt s finance ministry Mohamed maait. Al-Ahram
Egypt filed in March for a new IMF loan to address the severe impacts of the Russian-Ukrainian conflict on the country’s economy as well as to preserve the gains of its first wave of reforms undertaken between November 2016-July 2019.
The first wave of reforms was financed by a $12 billion loan it secured from the fund.
The new loan is a part of a total of $9 billion in financing Egypt is expected to secure from its international and regional development partners.
Of this, $6 billion is expected to come from multilateral and regional partners for the current FY2022/2023, which is predicted to strengthen Egypt’s external position.
Moreover, Egypt has also requested financing under the IMF’s newly created Resilience and Sustainability Facility (RSF) aimed at providing affordable, long-term financing to help build resilience, including against climate change.
Maait noted that the IMF estimated Egypt’s finance gap at $16 billion during the 46 months that is the maturity of the new loan programme, with an average of $4 billion per annum.
Egypt has recently decreased projections of its real GDP growth, to five percent from 5.5 percent, for the second time since the onset of the war in Ukraine.
Egypt’s GDP is projected to exceed EGP 9 trillion in the current FY2022/23 and to continue to grow to EGP 16.3 trillion by FY2026/27, according to the Ministry of Planning and Economic Development.
According to Maait’s statements, Egypt’s overall budget deficit is expected to not meet the government’s target of 1.6 percent during the current FY2022/2023 as a result of cost increases and the exchange rate fluctuation.
In August, the minister said Egypt had pledged to the IMF to attain an overall budget deficit of six percent of GDP and to raise the initial surplus by 1.6 percent in FY2022/2023.
Maait also stated that the government plans to release sovereign bonds worth $1.5-2.5 billion without providing more details.
In October, Prime Minister Mostafa Madbouly said that Egypt’s debt to GDP ratio is expected to reach 90 percent during the current FY2022/2023.
Egypt’s debt reached $155.7 billion by the end of FY2021/2022.
The minister also noted that the government is planning to offer new companies in the oil and banking sectors under its Initial Public Offering (IPO) programme within the during the third quarter of FY2022/23 (January-March 2023).
Egypt has postponed offering shares in state-owned companies under the IPO, planned in 2022, due to the repercussions of the Russian war on Ukraine.