War on Gaza will harm economies in Egypt, Jordan, Lebanon: IMF’s Georgieva

Doaa A.Moneim , Wednesday 25 Oct 2023

The war in Gaza will negatively impact the economies of neighbouring countries; including Egypt, Jordan and Lebanon, according to the Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva.

Kristalina Georgieva
File Photo: Kristalina Georgieva. AFP

 

Georgieva made her statements during the second day of the Future Investment Initiative event being held in Saudi Arabia in its seventh edition over three days.

The director listed the impacts, including decreasing tourism and investment, and potentially increasing the cost of insurance on exports.

“Investors are going to be shy to go to [these countries]. The cost of insurance, if you want to move goods, they go up. Risks of even more refugees in countries that are already accepting more,” said Georgieva.

“What we see is more jitters in what has already been an anxious world,” Georgieva asserted.

The IMF is set to release its regular update on its projections and estimations for the global and regional economies across the globe between December and January. These updates will reflect the real impacts of Israel’s war on Gaza on its nearby countries.

Egypt is racing to fufill the commitments it has pledged to the IMF under the Extended Fund Facility (EFF) loan programme the fund approved for the country in December.

Egypt has not completed any of the reviews under the loan deal as of yet. The deal allows Egypt to secure $3 billion in eight tranches over the programme’s tenor of four years.

The key commitments revolve around applying flexible regime for both interest rates and exchange rates, increasing the private sector’s role in the economy, and bringing down both debt and inflation levels to pre-pandemic levels by the end of the programme.

Meanwhile, the Egyptian is suffering a severe US dollar shortage, which is leading to a very active parallel currency market.

Dealing with the crisis, Egypt has set a plan to secure $191 billion through 2026, 20 percent of which is planned to be generated through the tourism sector.

During its annual meetings held in Marrakech in October, the IMF raised its projections for Egypt’s real GDP growth in 2023 to 4.2 percent, up from the 3.7 percent it expected in July. It also lowered its forecast for the country’s real GDP growth to 3.6 percent in 2024, down from the 4.1 percent it forecasted in July.

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