Factbox: Egypt’s fresh $3 bln IMF-backed economic reform programme

Doaa A.Moneim , Friday 23 Dec 2022

Late Friday, the Executive Board of the International Monetary Fund (IMF) approved a $3 billion 46-month loan deal for Egypt under the Fund’s Extended Fund Facility (EFF) with an immediate disbursement of about $347 million as a first tranche of the loan amount.



In this fact box, Ahram Online provides the cornerstones and measures of the fourth deal Egypt has closed with the IMF since the implementation of its IMF-backed first wave of reforms  in 2016.

  • The deal is the 12th Egypt has struck since becoming an IMF member in 1945, and the third since the COVID-19 pandemic outbreak.
  • With the new deal, Egypt will have secured from the IMF more than $11 billion since 2020, and more than $30 billion since 2016.
  • The deal is expected to conclude by FY2025/2026.
  • The EFF is the same facility Egypt secured its $12 billion loan in 2016 under. It is meant to address budget imbalances by focusing on applying free flotation of the local currency and giving a greater role to the private sector to play in the economy.
  • Setting the value of the Egyptian pound freely against other currencies (establishing a flexible exchange rate) aims to avoid the build-up of a chronic imbalances in the demand for and supply of foreign currency in Egypt and preserve the FX reserves of the central bank.
  • This would help Egypt’s domestic economy adjust more smoothly to external shocks, support the ability of Egyptian businesses to sell their goods and services abroad, and encourage greater investment by reducing the likelihood of large abrupt changes in the exchange rate, as well as helping preserve the financial buffers of the Central Bank of Egypt (CBE).
  • Monetary policy under the programme will centre on reducing inflation rate to meet the CBE’s target of seven percent (±2 percent), the erosion in purchasing power, and transitioning away from subsidising lending schemes,
  • The programme includes measures meant to attain fiscal consolidation and debt management to ensure a downward trajectory in public-debt-to-GDP ratio and contain gross financing needs, while increasing social spending and strengthening social safety net to protect the vulnerable and managing national investment projects in a manner consistent with external sustainability and economic stability.
  • Egypt plans to extend the coverage of the Takaful and Karama cash transfer program to include additional five million households, continue the rollouts of the universal health insurance scheme and the COVID-19 vaccination programme, extend emergency support to ration card holders and measures to protect the purchasing power of vulnerable wage earners and pensioners and expand the social registry that will enable the authorities to strengthen targeting of social protection schemes.
  • For the private sector, the programme will support the Egypt’s plan to reduce the state footprint in the economy, enhance transparency and governance of state-owned enterprises (SOEs), level the playing field for all economic agents through the removal of preferential treatment for SOEs and improvement of trade facilitation.
  • The programme also includes measures meant to strengthen competition policy and improve trade-related processes to strengthen the ability of the private sector to better contribute to economic growth and help create economic opportunities for Egypt’s large and fast-growing working age population.
  • The EFF is anticipated to catalyse additional financing of about $14 billion from Egypt’s international and regional partners, including new financing from gulf countries and other partners through the ongoing divestment of state-owned assets as well as traditional forms of financing from multilateral and bilateral creditors.
  • Egypt has also requested a loan access under the IMF’s recently created Resilience and Sustainability Facility (RSF) for about $1 billion to support the county’s climate-related policy goals.
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