The International Monetary Fund (IMF) has announced that Egypt’s access to its $8 billion financial program will hinge on the country’s commitment to allowing market dynamics to determine its currency’s value. Immediate disbursement of $820 million is scheduled for this week, with an additional $820 million contingent upon a review by the end of June.
Egypt’s currency policy has been a focal point since the loan agreement on March 6. Initially permitting a significant depreciation before re-pegging to the dollar, Egypt has now embraced currency devaluation and fluctuation.
IMF mission chief Ivanna Vladkova Hollar stressed the importance of sustaining this reform for economic stability. The IMF’s endorsement builds upon the $3 billion Extended Fund Facility established in December 2022, prompted by the Gaza crisis.
Alongside currency flexibility, the IMF seeks reforms promoting fair competition and reducing government intervention in Egypt’s economy. Future reviews may explore additional financing contingent upon Egypt’s adoption of climate change policies.
Concerns persist over Egypt’s high inflation, forecasted at 25.5% for the upcoming fiscal year, with a gradual decline to 15.25% by year-end. Efforts to address budgetary strains include phasing out untargeted fuel subsidies, with recent price increases part of this initiative.
Egypt’s commitment to IMF-mandated reforms signals a proactive approach to economic challenges and sustainable growth.
photo source: Google
By: Montel Kamau
Serrari Financial Analyst
2nd April, 2024
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