IMF mission concludes visit to Egypt

Ahram Online , Friday 2 Feb 2024

The International Monetary Fund (IMF) announced on Thursday the successful completion of its delegation's visit to Cairo, focusing on discussions aimed at finalizing the first and second reviews of Egypt's reform program supported by the IMF's Extended Fund Facility (EFF).

Hollar
IMF mission head to Egypt, Ivanna Vladkova Hollar. Photo: IMF

 

At the end of the two-week visit, from 17 January to 1 February, Ivanna Vladkova Hollar, head of the mission team, stated, "The IMF team and the Egyptian authorities made excellent progress on the discussions of a comprehensive policy package needed to reach a Staff Level Agreement (SLA) for the combined first and second reviews of Egypt’s economic reform program supported by the IMF," according to a statement on the IMF website.

"To this end, the IMF team and the Egyptian authorities have agreed on the main policy elements of the program. The authorities expressed a strong commitment to act promptly on all critical aspects of Egypt’s economic reform program," she added.

In December 2022, the IMF approved a four-year $3 billion EFF loan program for Egypt. However, the completion of the program's first and second reviews faced delays due to ongoing challenges in the country's economy arising from global and regional geopolitical tensions.

Under the EFF, Egypt committed to implementing flexible interest and exchange rate regimes, promoting private sector participation in the economy, and reducing debt and inflation levels to pre-pandemic figures by the program's end.

Hollar emphasized, "The IMF team and the Egyptian authorities also agreed on the critical importance of strengthening social spending to protect vulnerable groups. This is important to ensure adequate living conditions for low and middle-income households that have been hit particularly hard by rising prices."

"The mission and the authorities will continue discussions virtually over the coming days to finalize the Memorandum of Economic and Financial Policies (MEFP) and identify the magnitude of additional support from the IMF and other bilateral and multilateral development partners needed to help close Egypt’s increased financing gaps in the context of recent shocks," she concluded.

At the program's outset, Egypt had a financial gap estimate at $17 billion, which may have now widened following recent geopolitical tensions weighing heavily on the country’s economy.

Media reports suggest that Egypt is seeking an extension of IMF financing totaling $7 billion.

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