Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

IMF Considers Raising Value of Financing to Egypt to more than $3 bn

Sun 19 Nov 2023 | 11:34 PM
Taarek Refaat

Kristalina Georgieva, Director of the International Monetary Fund (IMF) stated that the Fund is seriously considering a possible increase in the loan provided to Egypt to finance its economic reform program amounting to $3 billion, explaining this during an interview with Reuters on the sidelines of the Asia-Pacific Economic Cooperation Summit, with the economic difficulties that Imposed by the Israeli war on the Gaza Strip.

Georgieva said that the war is devastating Gaza's population and economy and has serious effects on the economy of the West Bank, and also poses difficulties for neighboring countries Egypt, Lebanon and Jordan through loss of tourism and high energy costs.

Egypt has been cooperating with the IMF in implementing a 46-month economic reform program since last December. Egypt disbursed the first tranche of about $350 million, but the Fund postponed conducting the first and second reviews of the program until now due to the delay in implementing some measures, especially with regard to the exchange rate policy, which consequently postpones the disbursement of the second and third tranches of the loan, with a total of $700 million.

On the other hand, Egypt is preparing to repay dollar-denominated Eurobonds tomorrow, worth $500 million, which it had offered in 2019 for a period of 5 years, with a coupon interest of 4.5%. Dollar-denominated bonds in international markets amount to about $34.6 billion, in addition to about $4 billion in euros and about $1.5 billion in bonds denominated in Japanese yen and Chinese yuan.

At the same time, the cost of insuring Egypt’s sovereign debt continued to decline, with one-year contracts reaching 11.64% at the close of trading on Friday, compared to 13.45% on November 10, which is the lowest level since the end of last August, according to data.

The cost in 5-year contracts rose to 14.12% on Friday, compared to 15.58% on November 10. This was reflected in the performance of Egyptian dollar-denominated bonds traded in international markets, with the yield on bonds maturing in 2025 recording about 14.87%, compared to 18.3% on November 10 in Luxembourg Stock Exchange trading, while the yield on bonds maturing 2048 declined at a lesser pace, recording 15.47% compared to 16.3%.