The International Monetary Fund (IMF) announced on Friday the immediate disbursement of $820 million to the Egyptian government, marking part of an augmented plan to bolster the nation’s struggling economy.
The approval by the IMF’s Executive Board for the disbursement comes as a significant development for the Egyptian government, which has been eagerly anticipating this aid amid mounting economic challenges.
This disbursement is part of a $3 billion aid program initially granted to Egypt at the end of 2022, with an additional $5 billion extension approved earlier this month, bringing the total IMF lending to Egypt to $8 billion.
In a statement released to AFP on Friday, IMF Managing Director Kristalina Georgieva acknowledged the progress made by the Egyptian government in meeting the objectives outlined in the initial stages of the aid program, with the exception of the level of foreign currency reserves.
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Georgieva commended the Egyptian authorities for their efforts in implementing significant reforms, particularly in addressing macroeconomic imbalances through measures such as exchange rate unification and fiscal and monetary policy adjustments.
Earlier in the month, Egypt’s central bank implemented a substantial interest rate hike to combat inflation and align the official exchange rate with the black market rate, resulting in a significant depreciation of the Egyptian pound.
The economic challenges facing Egypt are multifaceted, including declining foreign currency earnings from sectors such as tourism and disruptions along the Suez Canal, compounded by internal issues such as poverty and mounting debt.
President Abdel Fattah al-Sisi’s ambitious megaprojects, initiated since 2013, have strained the country’s financial resources without generating sufficient revenue to offset the increased debt burden.
Egypt’s foreign debt has surged from $46 billion in 2013 to over $165 billion by 2022, making it one of the countries most vulnerable to default.
Despite these challenges, the IMF remains cautiously optimistic about Egypt’s economic prospects, forecasting a growth rate of 4.4 percent for the upcoming fiscal year, compared to 3 percent for the current fiscal year ending in June.
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