IMF looks for 'a shift flexible exchange rates' in Egypt after end of December

"A permanent shift to a flexible exchange rate regime" is one of the measures included in the Extended Fund Facility (EFF) 46-month package of $3 billion approved for Egypt by the IMF's Executive Board on Friday.

The Egyptian government filed for the new IMF loan in March to address the severe impacts of the Russian-Ukrainian war on the country’s economy.

The war has led to a drop in foreign currency reserves and downward pressures on the Egyptian pound.

Since, the government floated the exchange rate twice to attracct foreign currency.

In February, the government introduced new rules obliging all importers to use letters of credit to finance their imports in stead of the earlier collections system that was in force for many years.

The new rules were met by objections from some importers who said they would slow down supply chains and increase production costs thus leading to higher inflation.

In May, President Abdel-Fattah El-Sisi intervened by directing the government to exclude the importers of production supplies and raw materials from the letter of credit system.