The International Monetary Fund (IMF) has approved an $8 billion loan to aid Egypt’s economic revival with an immediate disbursement of $820 million. The approval of the loan is part of an effort to support Egypt’s economy due to external conflicts and tensions.
According to the IMF Managing Director Kristalina Georgieva, Egypt is facing significant macroeconomic challenges that have become more complex to manage given the spillovers from the recent conflict in Gaza and Israel. These conflicts have strained Egypt’s economy, affecting areas like tourism and Suez Canal shipping.
However, the country received a boost from a $35 billion investment deal with the United Arab Emirates, the largest of its kind in Egypt’s history.
“The difficult external environment generated by Russia’s war in Ukraine was subsequently aggravated by the conflict in Gaza and Israel, as well as tensions in the Red Sea.”
“The recent measures toward correcting macroeconomic imbalances, including unification of the exchange rate, clearance of the foreign exchange demand backlog, and significant tightening of monetary and fiscal policies, were difficult, but critical steps forward, and efforts should be sustained going forward,” the IMF statement said
The newly approved agreement builds upon a previous $3 billion Extended Fund Facility signed in December 2022 initially put on hold due to Egypt’s failure to fulfill certain pledges such as freeing its currency, selling state assets faster, and making other reforms. With the IMF’s support, Egypt anticipates additional financing of about $14 billion from international and regional partners.
