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Larger IMF program for Egypt under consideration, says Georgieva: The IMF is “seriously considering” increasing Egypt’s USD 3 bn loan program as the conflict in Gaza poses difficulties for the country, IMF Director Kristalina Georgieva told Reuters during the Asia Pacific Economic Cooperation Summit in California last week. She did not provide further details of any potential changes to the program.
Georgieva thinks we’re looking at a difficult path ahead because of the Gaza war: “Investors are going to be shy to go to [these countries]. The cost of ins., if you want to move goods, they go up. Risks of even more refugees in countries that are already accepting more,” the IMF chief said last month.
The government is reportedly looking for another USD 2 bn: Egypt is in talks with the IMF to increase its loan program to more than USD 5 bn, according to unconfirmed media reports in October. The fund will need to sign off on the first two reviews of the program before any announcement is made topping up the loan, the sources added.
But an increase might mean more strings attached: Economist Hany Geneina told us lastmonth that the Fund could increase the loan in return for a commitment to undertaking reforms early in 2024, including the currency float and a lifting of energy subsidies.
Remember: The IMF postponed reviews scheduled for March and September after authorities failed to meet several conditions of the facility, including a commitment to implement a fully flexible exchange rate. However, Georgieva said last month that “Egypt has made good progress on a number of fronts,” but warned that the country will continue to “bleed” reserves if the currency is not devalued.
ICYMI- The EU is also putting together a financial aid package because of the war on Gaza: The EU is reportedly putting together an assistance package that could see nearly USD 10 bn invested in Egypt and European creditors offer some form of debt relief. The bloc’s new initiative is driven by worries that a faltering Egyptian economy coupled with refugee flows from Israel’s brutal war on Gaza would mean an uptick in cross-Mediterranean migration.
