Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

IMF approves Increase of Egypt's Loan to $8 Billion

Sat 30 Mar 2024 | 12:36 PM
Pak­istani Government Seeks More Funds from IMF
Pak­istani Government Seeks More Funds from IMF

On Saturday, the International Monetary Fund (IMF) approved an increase in financial support for Egypt, raising the Extended Fund Facility (EFF) to $8 billion. This decision allows for an immediate disbursement of about $820 million to Egypt, signifying a major step forward in the country’s economic reform efforts.

Originally, Egypt secured a $3 billion deal with the IMF in December 2022, under a 46-month agreement aimed at bolstering the nation's economic stability and reform trajectory. The IMF's latest announcement marks the completion of the first and second reviews of this facility, which had been delayed, facilitating the significant increase in support.

The IMF highlights that Egypt is actively implementing a robust economic stabilization plan to address previous policy challenges. Key focus areas include liberalizing the foreign exchange regime, tightening fiscal and monetary policies, reducing government investments, and enhancing the role of the private sector in the economy.

A critical element of Egypt's reform strategy involves the ongoing reduction of subsidies, particularly in the fuel sector, to alleviate the government's fiscal burden. The recent fuel price adjustments reflect Egypt’s commitment to more efficient and targeted use of its resources. The IMF underscores the necessity of shifting from non-targeted fuel subsidies to targeted social spending, integral to a sustainable adjustment strategy for fuel prices.

Additionally, Egypt has introduced a new framework for the oversight and management of public investments to better handle demand increases. A significant recommendation from the IMF involves urging the state and military to diminish their roles in the economy, and advocating for transparency in off-budget investments to be included in macroeconomic policy decisions.

The IMF’s increased support is a testament to its confidence in Egypt’s comprehensive economic reform plan. It represents a crucial lifeline as Egypt aims to navigate through its current economic challenges, stabilize its economy, and secure sustainable growth for the future.