Egypt is counting on the disbursement of new funding from the International Monetary Fund to help shield its economy from escalating regional instability, after the IMF Executive Board gave the country access to about $1.8 billion. Egypt would receive about $1.5 billion under the IMF's 48-month loan program after completing the seventh review, along with roughly $272 million under the Resilience and Sustainability Facility, bringing total disbursements under Egypt's current arrangement with the fund to about $7.3 billion, the lender said in a statement. Egypt agreed to a $3 billion loan with the IMF in December 2022. The program was expanded to $8 billion in March 2024, when the country was grappling with high inflation and foreign currency shortages. Prime Minister Mostafa Madbouly said in a statement on Friday that the real significance of the Executive Board's decision lies not only in completing the review and making the new funding available, but also in the IMF's objective assessment of the Egyptian economy. The report acknowledged Egypt's efforts to address the repercussions of the war in the Middle East and its effective handling of regional developments through integrated policies, including exchange rate flexibility, energy price reforms, and tighter control of public spending. Madbouly stressed the government views the report as confirmation that its economic reform path is sound, while also serving as an incentive to continue implementing structural reforms. Egypt is counting on the disbursement of new funding from the International Monetary Fund to help shield its economy from escalating regional instability, after the IMF Executive Board gave the country access to about $1.8 billion. Egypt would receive about $1.5 billion under the IMF's 48-month loan program after completing the seventh review, along with roughly $272 million under the Resilience and Sustainability Facility, bringing total disbursements under Egypt's current arrangement with the fund to about $7.3 billion, the lender said in a statement. Egypt agreed to a $3 billion loan with the IMF in December 2022. The program was expanded to $8 billion in March 2024, when the country was grappling with high inflation and foreign currency shortages. Prime Minister Mostafa Madbouly said in a statement on Friday that the real significance of the Executive Board's decision lies not only in completing the review and making the new funding available, but also in the IMF's objective assessment of the Egyptian economy. The report acknowledged Egypt's efforts to address the repercussions of the war in the Middle East and its effective handling of regional developments through integrated policies, including exchange rate flexibility, energy price reforms, and tighter control of public spending. Madbouly stressed the government views the report as confirmation that its economic reform path is sound, while also serving as an incentive to continue implementing structural reforms. Fuel price increases are quickly reflected in commodity prices (Egyptian Ministry of Supply) The reforms include strengthening the role of the private sector, carrying out the State Ownership Policy Document, accelerating the privatization program, and improving the business environment in order to attract more domestic and foreign investment, boost growth and employment, and enhance the competitiveness of the Egyptian economy. In March, Egypt raised fuel and gas prices by rates ranging between 14 and 30 percent in response to the effects of the Iranian war, and increased electricity prices several weeks later by rates ranging between 16 and 28 percent. Ayman Mehasseb, Deputy Chairman of the House of Representatives' Economic Affairs Committee, told Asharq Al-Awsat that the IMF decision sends a new message of confidence in the strength of the Egyptian economy and reinforces its ability to withstand regional and international disruptions amid ongoing challenges facing both the region and the global economy. He added that the importance of the decision is not limited to the value of the funding itself, but also reflects the government's success in implementing its economic reform program and maintaining the stability of key macroeconomic indicators. He noted that the Egyptian economy has become better able to absorb shocks thanks to exchange rate flexibility, improved foreign currency resources, and fiscal discipline. Mehasseb argued that the next phase requires accelerating structural reforms, strengthening the private sector's role, and improving the investment climate to reduce reliance on external financing and increase the economy's capacity to meet its needs through its own resources. He stressed that continuing reforms remains the key guarantee for enhancing Egypt's competitiveness and raising its ability to confront future crises. A fuel station in Egypt (AFP file photo) Financial markets expert Wael El-Nahhas told Asharq Al-Awsat that the approval of the disbursement reflects the continued implementation of Egypt's economic reform program, despite the IMF's reservations regarding certain aspects of the process. "A renewed escalation of regional tensions could weigh on growth, raise global inflationary pressures, tighten financial conditions, and put additional pressure on the fiscal and external positions," the IMF said in its statement. Efforts to reduce the state’s role in the economy and create greater space for private sector investment, including through divestment of state assets, have progressed more slowly than anticipated and need to be accelerated, the lender added.
