IMF Lines Up $1.5 Billion to Egypt within Weeks

The International Monetary Fund (IMF) intends to provide about $1.5 billion to Egypt within weeks, within the framework of the loan that was agreed to increase last Wednesday from $3 billion to $8 billion.

The amount will include the first and second review tranches, which were postponed earlier.

Egypt obtained a first tranche worth $350 million from the Fund’s loan in late 2022, and since that time the first and second reviews of the program have been postponed, and disbursement of the remaining tranches was halted until the announcement last Wednesday of raising the value of the loan to $8 billion.

The Egyptian government and the IMF announced that they had reached an agreement at the expert level regarding the two reviews of the 3-year loan program.

PM Mostafa Madbouly said in press statements that signing the agreement with the International Monetary Fund allows the government to apply for an additional loan worth $1.2 billion from its Environmental Sustainability Fund, bringing the total proceeds to exceed $9 billion.

Egypt's agreement with the International Monetary Fund allows it to obtain a financial support package from its partners worth more than $20 billion, including $3 billion from the World Bank.

Egyptian Finance Minister Mohamed Maait said that Egypt's agreement with the International Monetary Fund will enable it to obtain a financial support package from its partners worth more than $20 billion, including three billion dollars from the World Bank.

Last Wednesday, the CBE raised the interest rate by 600 basis points, bringing its rates on deposits, lending, and the main process at 27.25, 28.25, and 27.75%, respectively. The interest on credit and debit was also raised by 600 basis points to reach 27.75%.

The agreement to develop the Ras El Hekma region with Abu Dhabi Holding Company ADQ contributed to relieving pressure on the Egyptian economy. The deal is considered the largest in the history of Egyptian investment, and is worth about $34 billion from the transfer of an $11 billion Emirati deposit into the pound to be re-injected into development investments in various regions.

Madbouly said in press statements that the Ras El Hekma deal will see the Egyptian government receive 35% of the project’s revenues throughout its implementation period, and the project is expected to attract investments exceeding $150 billion.

The deal also eased the pressure on Egypt's foreign exchange, which had suffered from a severe crisis in recent months. The price of the dollar exceeded the level of 70 pounds, but it returned to decline since its announcement to levels less than 45 pounds, rising again to levels of 49.5 following the interest rate hike of 600 basis points last Wednesday.

Maait said that the Ministry of Finance agreed with the Urban Communities Authority that a share of no less than 50% of any investment it has would be for the benefit of the public treasury. He said in a press conference that Ras Al-Hikma's revenues in pounds will help reduce the budget deficit from the target, while he did not specify the value of what will go to the state's general treasury.