IMF AGREES TO EXPAND EGYPT LOAN AGREEMENT BY $5 BILLION

World Bank to provide support of more than $6 billion to Egypt over the next three years

The International Monetary Fund and Egyptian authorities recently reached a staff-level agreement on a set of comprehensive policies and reforms. The new agreement will see the IMF increase its loan facility to Egypt from $3 billion to around $8 billion. This $5 billion facility is subject to approval by the IMF Executive Board. “The comprehensive policy package seeks to preserve debt sustainability, restore price stability and reinstate a wellfunctioning exchange rate system, while continuing to push forward deep structural reforms to promote private sectorled growth and job creation,” the IMF said in a statement. The latest agreement is an expansion of the $3 billion, 46-month extended fund facility that the IMF struck with Egypt in December 2022. A key plank of this deal was a shift to a more flexible exchange rate system.

Prior to the announcement of the agreement, Egypt’s central bank also announced that it has raised interest rates by 600 basis points and will allow the country’s currency to trade freely. This decision is aimed at restoring economic stability and attracting investment from Gulf countries.

In a separate announcement, the World Bank revealed plans to provide support of more than $6 billion to Egypt over the next three years, restating its commitment to the long-term strategic partnership with Egypt. It also aims to support the measures the country is taking for its economic recovery and sustainable growth.