Georgieva: IMF Will Continue to Support Egypt

Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) said that the Fund will continue to support the Egyptian economy, in conjunction with its implementation of economic reforms, noting in an interview with "Bloomberg Asharq" that "political issues are outside its jurisdiction," referring to US President Donald Trump's pressure on Egypt regarding the displacement of Gaza population.

US President Donald Trump threatened to stop aid to Jordan and Egypt if they did not receive refugees from the Gaza Strip, while Egyptian President Abdel Fattah al-Sisi stressed the importance of starting the reconstruction process of the Gaza Strip immediately without displacing Palestinians.

Georgieva said in response to a question by "Asharq" about the extent of the Fund's commitment to its plans towards Egypt in light of the pressures exerted by Trump on the Egyptian government: "Supporting the Egyptian economy is a priority and will remain so. What concerns us is the overall situation of the country and we are focusing on the economy. As for political issues, they are outside our jurisdiction and we are not the best people to comment on them."

Egypt, with a population of more than 106 million, agreed in March to increase the value of the loan from the fund to $8 billion, after suffering from a severe foreign exchange crisis since early 2022.

In December, the IMF reached an agreement with Egypt on the fourth review of the $8 billion expanded support program, allowing Cairo to obtain about $1.2 billion, subject to the approval of the Fund’s Executive Board.

Georgieva added on the sidelines of the “Al-Ula Conference for Emerging Markets Economies” that kicked off in the Saudi city of Al-Ula today that the progress made by the Egyptian government, regarding the reforms required by the Fund, contributes to strengthening the country’s financial position.

Meantime, IMF has lowered its forecast for Egypt's economic growth for the current and next fiscal years, expecting real GDP to grow by 3.6% in fiscal year 2024/25, which runs until the end of  June, down 0.5% from October's forecast, with growth accelerating to 4.1% in the next fiscal year, according to the Fund's updated World Economic Outlook report issued last month.

The Fund's Director revealed that the working group concerned with Egypt will present to the Fund's Board of Directors a new review of the Egyptian economy's restructuring and financing program, and the board will in turn discuss the review and make the appropriate decision, explaining that the reviews and coordination with the Egyptian government are taking place according to the specified timetable.

She pointed to some of the reforms that have been completed, including allowing the exchange rate to reflect market conditions, proceeding with the privatization program, and ensuring that subsidies are reduced so that the state can strengthen its position, noting that "Egypt has been going through difficult times for some time due to events in the region and the decline in Suez Canal revenues."

The latest data on the Egyptian economy shows that it has been affected by geopolitical tensions and a decline in its gas production, as the balance of payments turned into a deficit in the first quarter of the current fiscal year, after the country's oil exports declined and Suez Canal revenues declined. The deficit was limited by the increase in remittances from Egyptians abroad and the improvement in tourism revenues.