IMF completes Egypt’s 3rd EFF review

Updated 7/30/2024 7:33:00 AM

Arab Finance: The Executive Board of the International Monetary Fund (IMF) completed the third review of Egypt’s $8 billion Extended Fund Facility (EFF) arrangement, according to a statement.

Hence, the Egyptian authorities can immediately draw around $820 million, equivalent to special drawing rights (SDR) of 618.1 million.

The need for ongoing implementation of program commitments arises from the challenging regional climate caused by the Israeli-Gaza conflict, Red Sea tensions, and other domestic policy and structural issues, the lender stated.

However, the IMF highlighted that macroeconomic conditions began to improve after the combined first and second program reviews were approved in March.

This was manifested in the gradual easing of inflationary pressures, elimination of foreign exchange shortfalls, and meeting fiscal targets, it added.

Moreover, the IMF noted that it would be essential to maintain a liberalized foreign exchange system and a flexible exchange rate regime to prevent the accumulation of external imbalances.

Additionally, the Central Bank of Egypt (CBE) must adopt a data-driven strategy to curb inflation and inflation expectations.

Also, particular attention will be required to enhance domestic revenue mobilization and mitigate fiscal risks associated with the energy sector, the financial agency said.

“Looking ahead, implementation of the structural reform agenda is key to achieving more inclusive and sustainable growth,” Antoinette Sayeh, IMF’s Deputy Managing Director and Acting Chair, stated.

“Risks remain significant. Regional conflicts and uncertainty about the duration of disruption of trade in the Red Sea are important sources of external risk,” she added.