IMF reaches agreement on Egypt’s next loans

The International Monetary Fund said on Tuesday it had reached a staff-level agreement with Egypt on the fifth and sixth reviews under its Extended Fund Facility arrangement, potentially unlocking a roughly $2.5 billion disbursement under the programme.

The fund combined the fifth and sixth reviews of Egypt’s support programme to give authorities more time to meet critical objectives embedded in it.

In a statement, the IMF also said it had reached a staff-level agreement on the first review of another ongoing fund programme, the Resilience and Sustainability Facility, which could potentially give Egypt access to an additional $1.3 billion.

The staff-level agreements must still be approved by the IMF’s executive board.

Egypt agreed to the expanded $8 billion, 46-month loan in March 2024, at a time when it was grappling with high inflation and shortages of foreign currency.

In recent months, Egypt has managed to tame inflation, which peaked at 38% in September 2023. Annual urban consumer inflation stood at 12.3% in November.

The country’s foreign currency shortage has also eased, helped by the IMF loan programme, record tourism revenues, remittances from Egyptians working abroad and investment deals with Gulf countries including the UAE worth tens of billions of dollars.

“Stabilisation efforts have delivered important gains and the Egyptian economy is showing signs of robust growth,” IMF Mission Chief for Egypt Vladkova Hollar said in a statement.

The IMF said structural reforms still need to be accelerated, including the divestment of state assets, a centerpiece of the loan deal where the fund believes progress has been slow.

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In August, Egypt ratified legislative amendments aimed at accelerating the sale of state-owned assets.

“Going forward, efforts to reduce the role of the state need to be accelerated. This includes significant further progress with the divestment agenda, and additional efforts to level the playing field,” Hollar added.

The IMF has so far paid out about $3.5 billion under the loan programme, according to Reuters calculations.