Egypt’s Economic Problems Prompts IMF Authorize $820 Million Loan

THE International Monetary Fund (IMF) gave the Egyptian government a boost on Friday, March 29, by immediately disbursing $820,000,000.

This payment is a component of a larger aid package meant to help Egypt's faltering economy.

The payment, which is a portion of a bigger $3 billion aid package that was first approved in late 2022, was approved by the IMF Executive Board.

The $5 billion extension that was announced earlier this month was also authorized by the Board, increasing the total amount of IMF loans to Egypt to $8 billion.

The IMF Managing Director Kristalina Georgieva commended the Egyptian government's efforts in achieving the goals specified in the program's initial phases in a statement that was made public on Friday.

Georgieva observed that reform efforts were getting stronger. These efforts included steps to address macroeconomic imbalances, like unifying the currency rate and making major changes to fiscal and monetary policy.

The central bank of Egypt recently increased interest rates by six percentage points to 27.75 percent in an effort to fight inflation and bring the official currency rate closer to the black market rate.

The Egyptian pound sharply declined as a result of this action, reflecting the difficulties the country's economy is currently suffering.

Several reasons, including the loss of important revenue streams like tourism and trade through the Suez Canal, have made Egypt's economic troubles worse.

Egypt's financial situation has been further strained by the Huthi rebel attacks in Yemen, which have resulted in a major reduction in dollar revenues from the canal.

The IMF is cautiously optimistic about Egypt's economic prospects for the next fiscal year in spite of these obstacles.

There are indications of recovery as economic growth is expected to increase to 4.4 percent from the current fiscal year's 3 percent.

President Abdel Fattah al-Sisi has led Egypt to embark on large-scale infrastructure projects during the last ten years.

However, based on data from the World Bank, these projects have significantly increased the country's foreign debt, which is currently over $165 billion.

The IMF's assistance is intended to give Egypt stability and promote economic growth in spite of these debt worries.