IMF-Egypt staff-level agreement clears path for $820M disbursement

Updated 6/7/2024 4:57:00 AM

Arab Finance: The International Monetary Fund (IMF) and the Egyptian authorities have reached a staff-level agreement on economic policies and reforms for the third Extended Fund Facility (EFF) review, under which Egypt could access about $820 million, the IMF stated in a press release.

The agreement is pending the approval of the IMF’s Executive Board.

This comes a result of discussions between an IMF mission led by Ivanna Vladkova Hollar and Egyptian authorities in Cairo from May 12^th to 26^th. The discussions continued virtually thereafter.

Despite geopolitical tensions, Egypt has maintained macroeconomic stability, Vladkova Hollar noted.

She highlighted that improved outlook, FX availability, slowing inflation, and indicators of a recovery in private sector sentiment are evident.

However, she asserted that Egypt’s economic outlook is still affected by the Gaza-Israel conflict and potential trade disruptions in the Red Sea.

Additionally, Vladkova Hollar pointed out that both the mission and the authorities in Egypt have agreed that monetary policy needs to remain tight to bring inflation toward the Central Bank of Egypt’s (CBE) target.

“Consideration of the third review of Egypt’s EFF-supported program by the Executive Board is expected in the coming weeks,” she said.

Vladkova Hollar announced last April that the IMF was expected to complete the third review under the EFF for Egypt by the end of June 2024, which enables the country to draw about $820 million of the $8 billion loan program.

On March 29^th, the IMF’s Executive Board concluded the first and second reviews EFF deal with Egypt and approved an augmentation of the original loan program by $5 billion, as per the report.

On December 16^th, 2022, the IMF approved the 46-month EFF arrangement for Egypt.