IMF considers increasing Egypt's $3 billion loan programme amid Gaza war: Managing director

Ahram Online , Saturday 18 Nov 2023

Amid the devastating Israeli war on Gaza, the International Monetary Fund (IMF) is considering expanding Egypt's $3 billion loan programme by an unspecified amount, Kristalina Georgieva, the fund’s managing director, said on Friday.

File Photo: Kristalina Georgieva. AFP
File Photo: Kristalina Georgieva. AFP


Georgieva acknowledged the severe economic difficulties faced by Egypt as a result of the war, during an interview with Reuters on the sidelines of the Asia Pacific Economic Cooperation Summit.

She also emphasized the detrimental impact on Gaza's population and economy, as well as the ripple effects on the economy of the West Bank.

The repercussions of the conflict are not limited to the Palestinian territories, she said.

“It is also posing difficulties for neighboring countries Egypt, Lebanon, and Jordan through the loss of tourism and higher energy costs," Georgieva added.

Egypt is racing to fulfil its commitments under the IMF's Extended Fund Facility (EFF) loan programme, which was approved in December.

Egypt has yet to complete any of the reviews stipulated in the loan agreement. The programme, spanning four years, allows Egypt to access $3 billion in eight installments.

Egypt’s key commitments include implementing a flexible regime for interest rates and exchange rates, boosting the role of the private sector, and reducing both debt and inflation levels to pre-pandemic figures by the end of the programme.

Last week, the S&P Global Rating agency expressed concerns about the Israeli war’s impact on foreign tourism to neighboring countries, including Egypt.

S&P conducted various scenarios, predicting a decline in Egypt's tourism revenues, ranging from 10 to 30 percent, which could potentially cost the state 4-11 percent of its foreign exchange reserves.

Egypt experienced a surge in tourism revenues during the fiscal year 2022/23, reaching a record high of $13.6 billion. This marked a remarkable increase of 26.8 percent compared to the previous fiscal year's figure of $10.7 billion, as reported by the Central Bank of Egypt (CBE).

The growth in tourism revenues played a vital role in transforming Egypt's balance of payments, turning a $10.5 billion deficit in FY2021/2022 into a surplus of $882 million in the last fiscal year.

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