2024-04-02 13:34:00
(Ecofin Agency) – Egypt is facing a financial crisis due to several endogenous and exogenous factors. To deal with this, the country is implementing reforms supported by the IMF, which has just disbursed $820 million in its favor.
The International Monetary Fund (IMF) announced, in a press release published on Friday March 29, 2024, that the growth of the Egyptian economy is expected to slow to 3% for the 2023-24 financial year, before increasing to 4.5% in 2024-25, due to the financial crisis the country is going through.
Indeed, this situation arises from several factors, including the covid-19 pandemic, the conflict in Ukraine and tensions in the Middle East. Recent attacks by Yemen’s Houthi rebels on shipping in the Red Sea and Gulf of Aden have also contributed to a significant fall in dollar revenues from the Suez Canal, putting further pressure on the country’s economy.
In this difficult context, the IMF stressed the importance of “ decisive domestic political action supported by a more robust external financing program “. The first and second reviews of the Extended Credit Facility (EDCF) arrangement highlighted the reform efforts undertaken by the Egyptian government.
Kristalina Georgieva, President of the IMF, welcomed the measures taken to correct macroeconomic imbalances, notably the unification of the exchange rate and the reduction of demand for foreign currencies. Thus, IMF staff approved a disbursement of $820 million for the country, as well as an increase in the initial program by around $5 billion, bringing the total IMF assistance to $8 billion. .
As a reminder, Cairo and the Bretton Woods institution reached an agreement on an aid program of $3 billion over 46 months in December 2022. Its objective is to preserve macroeconomic stability, restore shock absorbers and open the path to inclusive and private sector-led growth.
However, the first two reviews of this program were postponed, due to the delay by the Egyptian authorities in implementing certain delicate reforms such as total exchange rate flexibility.
In addition to the IMF financial program, Egypt has benefited from financial support from other multilateral financial institutions, namely: the World Bank and the European Union as well as certain partners, notably the United Arab Emirates which injected 35 billion dollars of investments in tourism and urban projects.
Charlene N’dimon
Also read:
03/07/2024 – Egypt: the IMF increases its aid program by $5 billion following currency devaluation
02/28/2024 – Egypt: the IMF will approve an increase in the amount of its aid program “in a few weeks” (K. Georgieva)
02/03/2024 – The IMF announces an agreement with Egypt on the “main elements” of the economic reform program
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