IMF: Slowing Pace of Some Reforms in Egypt Helps Avoid Macroeconomic Instability

Kristalina Georgieva, managing director of the International Monetary Fund, said Egypt may need to slow down the pace of reforms to avoid undermining  the macroeconomy, amid preparations to review the country's $3 billion bailout package, according to Bloomberg.

Today, on the sidelines of the spring meetings in Washington, the IMF director told reporters that the fund and Egypt agreed on a sound program, with pillars that include the application of a flexible exchange rate for the pound, and strengthening the role of the private sector. .

She considered that following that preliminary plan “could undermine macroeconomic stability,” without going into more specific details, adding: “In Egypt, we have come to a deeper understanding of the extent of complexity, not only at the level of the local environment, but also regionally and globally.”

The Russian invasion of Ukraine has particularly affected the Egyptian economy, leading to significant increases in food and fuel prices, and slashing vital tourism revenues for the country. The most populous country in the Middle East is also grappling with its worst hard currency crisis in years.

The IMF announced last January that it is expected to complete the first review of Egypt's 46-month support program in March.

"We are now preparing for the review, the teams are working on it, and I am sure we will achieve a good result," Georgieva said.

Egypt may need to adjust the pace of implementing its long-term investment projects, according to Georgieva.

Georgieva told reporters in Washington that these projects are "certainly good and important projects for Egypt, but under the current difficult conditions they may undermine macroeconomic stability if they continue to be implemented at the speed that was previously approved in different circumstances."

While the IMF and Egypt "agreed on a sound programme," Georgieva explained, on the sidelines of the spring meetings in Washington, with pillars including the implementation of a flexible exchange rate for the pound and strengthening the role of the private sector, the pace of implementation of the planned projects "was originally designed in light of different circumstances.”

She emphasized, "In Egypt, we have come to a deeper understanding of the extent of complexity, not only in terms of the local environment, but also regionally and globally."