Why did the IMF postpone our third review? The IMF Executive Board has pushed back the third review of our USD 8 bn loan program to 29 July to “finalize some details,” IMF Communications Director Julie Kozack said on Thursday during a press briefing. The postponement “is not unusual in these kinds of circumstances,” she said, pointing to regional headwinds and domestic structural challenges. The IMF is “quite confident on the path forward for Egypt,” she added.

Remember: The IMF Executive Board was initially scheduled to discuss the third review on 10 July, before the Fund pushed the meeting to the end of the month. The greenlight from the board will see the Fund disburse a fresh USD 820 tranche into the state coffers and will allow Egypt to apply for an additional USD 1.2 bn in climate finance. Egypt and the IMF reached a staff-level agreement on the third review early last month.

The challenges? Kozack cited a drop in Suez Canal receipts, explaining that revenues from the waterway have fallen by more than half from last year, straining the economy and depriving the country of an important source of foreign exchange and fiscal revenue. The Central Bank’s most recent current account data showed Suez Canal receipts falling 57.2% y-o-y drop in the third quarter of the 2023-2024 fiscal year after Houthi attacks on vessels passing the waterway started to pick up.

All in all, things are looking up: “Recent efforts by the Egyptian authorities to restore macroeconomic stability have helped improve economic conditions in Egypt,” Kozack said. “Inflation has fallen for four consecutive months … the foreign exchange demand backlog has been eliminated, and there are signs that the three and a half-year contraction in private sector activity is finally reversing.”

AND- IMF to lower surcharges on borrowers? The IMF is conducting a “comprehensive review” of the surcharges it levies on borrower countries, Kozack confirmed in response to a question on the topic. The question follows reports last week that the Executive Board would meet to discuss options to lower surcharges after several countries raised concerns that the penalties were becoming too hefty in light of higher interest rates and inflation. Egypt is the Fund’s third largest debtor with USD 10.3 bn of outstanding credit, behind Ukraine and Argentina.

The story also caught the attention of the int’l press: Reuters.

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