Egypt in discussions with IMF for additional funding

Kozack made these remarks during the regular press briefing the IMF held on Thursday. 

She was responding to a question by Ahram Online about the latest updates on the Extended Fund Facility (EFF) loan program with Egypt in light of the IMF’s managing director's statements at COP28. 

The director had stated that she expects the IMF to increase the amount of the loan granted to Egypt per the program, given the ongoing Israeli war on Gaza.

“The exact size of financing is part of the ongoing discussions that IMF staff is having with the Egyptian side,” Kozack told Ahram Online.

“The Egyptian economy is facing significant macroeconomic challenges that have become more complex to manage given the recent conflict in Gaza,” she asserted.
Kozack also noted that the IMF is currently discussing with the Egyptian authorities policies that could support the completion of the first and second reviews under the $3 billion EFF loan program with Egypt.

“This strong engagement with the authorities has helped achieve important progress in the discussions, which will continue in the coming weeks to operationalize key policy priorities. These include the need to tighten monetary and fiscal policy together with a flexible exchange rate system in support of Egypt’s commitment to reduce inflation and gradually move to an inflation targeting regime,” she noted.

In December 2022, the IMF approved a 46-month EFF loan program for Egypt. According to the agreement, The IMF would review Egypt's economy periodically to ensure the implementation of the Fund's recommendations and to release further tranches of the loan. 

Due to complex challenges facing the Egyptian economy, the IMF has not completed the first and second reviews of the program, thus delaying the disbursement of two more tranches of the loan that Egypt should have received in March and September of this year.  

Under the fund's EFF loan program, Egypt committed to implementing flexible interest and exchange rate regimes, promoting private sector participation in the economy, and reducing debt and inflation levels to pre-pandemic figures by the programme's end.

Furthermore, Egypt committed to offering stakes in 35 state-owned companies to strategic investors by 2024.

By implementing these policies, the IMF believes Egypt will be able to bridge the $17 billion financing gap in the economy through 2026 and control inflation and debt levels.

On the other hand, Egypt is also discussing a $1 billion loan with the IMF under the Fund’s Resilience and Sustainability Trust. 

In response to Ahram Online's question about the impacts of the ongoing conflict in Gaza on the economies of neighbouring countries, particularly Egypt, Kozack explained that the IMF has called not only for the end of this conflict but for all conflicts.

“Unfortunately, this conflict is yet another example that we live in a very uncertain and shock-prone world. From a global perspective, the economic impact of the conflict has so far been relatively contained, but things remain highly uncertain,” she added.