IMF Disburses $1.2 Billion Fourth Tranche to Egypt

The International Monetary Fund (IMF) approved the disbursement of the fourth tranche of its $1.2 billion loan to Egypt after the IMF Board of Executive Directors approved the results of the fourth review of the Egyptian government's economic reform program.

According to a statement issued by the official spokesperson for the Egyptian Cabinet Mohamed El-Homsani, the disbursement of the fourth tranche of Egypt's loan comes within the framework of the program signed with the IMF to enhance macroeconomic stability, increase foreign exchange reserves, and provide the necessary financing to bridge the financing gap, in addition to supporting efforts to reduce inflation and boost growth rates, 

El-Homsany noted that the meeting between Prime Minister Mostafa Madbouly and Mohamed Maait, Executive Director of the IMF and Representative of the Arab Group and the Maldives, reviewed developments in financial and technical cooperation between the two sides and followed up on the upcoming fifth review of the program.

The meeting also addressed the IMF's approval of Egypt's accession to the Sustainability and Resilience Program, which provides long-term financing worth $1.3 billion on concessional terms to support structural reform efforts and enhance the resilience of the Egyptian economy in the face of global crises.

This comes after Egypt succeeded in March 2024 in increasing the size of its IMF program from $3 billion to $8 billion, to overcome the severe foreign exchange crisis that has plagued the country since early 2022.

The Egyptian government recently resorted to reducing subsidies on many essential services and goods in an attempt to reduce the deficit and mitigate the recurrence of the dollar shortage. Since last July, it has raised the prices of gasoline, diesel, train and metro tickets, followed by increases in the prices of many other goods and services. In March 2024, it allowed the Egyptian pound to depreciate by 40% and raised interest rates to a record low.

The Egyptian authorities have sought to restructure their medium-term financial commitments agreed upon with the IMF, as Bloomberg reported at the end of last year.

Kristalina Georgieva, Managing Director of the International Monetary Fund, indicated, in an interview with Bloomberg, that the Fund will continue to support the Egyptian economy while it implements economic reforms.

Georgieva added that the Egyptian government's progress on the reforms required by the IMF is contributing to strengthening the country's financial position.

It's worth noting that the International Monetary Fund (IMF) has lowered its forecast for Egypt's economic growth for the current and next fiscal years, expecting real GDP growth of 3.6% in the 2024-2025 fiscal year, which runs until the end of next June, a half percentage point lower than its October forecast. Growth is expected to accelerate to 4.1% in the next fiscal year, according to the IMF's updated World Economic Outlook report issued last January.