The IMF approves an increase in Egypt’s financing program by $5 billion

The International Monetary Fund said in a statement that Egypt obtained the approval of the Fund’s Executive Board to increase the extended financial support program to eight billion dollars, which allows the immediate withdrawal of about 820 million dollars.

The Fund agreed to expand the scope of the agreement after Egypt’s faltering economy was further damaged by the war in the Gaza Strip, which slowed the growth of tourism and prompted Yemen’s Houthis to launch attacks in the Red Sea, which led to Suez Canal revenues being halved.

Tourism and shipping are the main sources of foreign exchange in Egypt.

The Executive Board of the IMF also announced the completion of the first and second reviews within the framework of the Extended Fund Facility for Egypt.

The International Monetary Fund said in a statement: “The difficult external environment created by Russia’s war in Ukraine was subsequently exacerbated by the war in Gaza, as well as tensions in the Red Sea.”

The agreement expands an extended fund facility by $3 billion for a period of 46 months, concluded in September 2022, which was suspended after Egypt did not adhere to its pledges to liberalize the currency exchange rate, accelerate the sale of state assets, and implement other reforms.

The extension of the agreement was announced for the first time in March, when the Central Bank of Egypt raised interest rates by six percentage points and allowed the value of the Egyptian pound to be devalued against the dollar.

“A strong economic stabilization plan is being implemented to correct policy errors,” the Fund said, “with a focus on liberalizing the foreign exchange system, tightening fiscal and monetary policy, reducing government investment, and providing more space for the private sector.”