The International Monetary Fund said on Wednesday that its mission concluded a visit to Egypt and made significant progress in discussing policies to complete the fourth review under the Extended Fund Facility.
The review, which could provide more than $1.2 billion in financing, is the fourth in the Fund’s 46-month loan program, which was approved in 2022 and increased to $8 billion this year after an economic crisis that saw high inflation and a severe shortage of hard currency.
The Fund also said that Egypt “implemented key reforms to maintain macroeconomic stability,” including unifying the exchange rate that facilitated imports in light of the Central Bank of Egypt’s repeated pledge to maintain a flexible exchange system.
Egyptian Prime Minister Mostafa Madbouly had said earlier on Wednesday that Cairo had asked the Fund to amend the program’s objectives not only for this year, but for its entire duration, without providing details.
Why are Egyptians afraid of the “fourth review” of the IMF?
Next November, the International Monetary Fund is scheduled to begin the “fourth review” of the Egyptian economic reform program, a step that raises fears among Egyptians that it will lead to an increase in prices in light of the Fund’s adherence to its demands to lift government support for services and liberalize the exchange rate.
The Fund added in a statement, “Discussions will continue during the coming days to complete agreement on the remaining policies and reforms that may support the completion of the fourth review.”
Madbouly had confirmed in previous statements that the government would not add new burdens to citizens during the coming period.
The Fund approved the loan program for the first time in 2022 before increasing its size this year after high inflation and a severe shortage of hard currency led to a severe economic crisis in Egypt.
Egypt has requested funding within the framework of the Resilience and Sustainability Facility since 2022, as it hopes to obtain up to an additional billion dollars.
Each of the first three reviews allowed the Egyptian authorities to obtain $820 million, and the third review was completed at the end of July.
When the Fund completed its third review, it said that inflationary pressures had begun to gradually ease, the foreign exchange shortage crisis had been addressed, and fiscal targets had been achieved, including those related to spending on huge infrastructure projects.
He also stressed the need to make further efforts to accelerate the implementation of the program to divest from state-owned companies and implement the necessary reforms to prevent them from using unfair competitive practices.
Egypt.. An official pledge to citizens and “understanding” from the IMF
Egyptian Prime Minister Mostafa Madbouly pledged on Wednesday that the government will not add new burdens to citizens during the coming period.
Data from the Central Agency for Public Mobilization and Statistics in Egypt showed on Sunday that the annual inflation rate for consumer prices in Egyptian cities rose to 26.5 percent in October from 26.4 percent in September, which is slightly lower than expectations.
On a monthly basis, inflation rose 1.1 percent in October, the same rate recorded in September.
Inflation figures affect the monetary policy decisions of the Central Bank of Egypt, whose Monetary Policy Committee is scheduled to meet on November 21. The committee kept interest rates unchanged at its most recent meeting in October.
After reports of a “request of two billion dollars”… Egyptian statement regarding the International Monetary Fund loan
Egypt announced, on Tuesday, that it had not asked the International Monetary Fund to increase the value of the fourth tranche of the Fund’s loan to two billion dollars instead of 1.3 million.
The central bank has not changed interest rates since it raised them by 600 basis points in an extraordinary meeting in March as part of a loan agreement with the International Monetary Fund. This increase came after an increase of 200 basis points on the first of February.
Egypt’s inflation rate was trending down from its highest level of 38 percent in September 2023, but it rose unexpectedly in August and September 2024.
Inflation recorded 26.2 percent in August, up from 25.7 percent in July, before continuing to accelerate to 26.4 percent in September.
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