IMF to begin Egypt’s fourth loan review tomorrow + more from IMF head’s visit

Egypt’s fourth IMF review is right around the corner: The International Monetary Fund will begin the long-awaited fourth review of Egypt’s IMF loan program tomorrow, Prime Minister Moustafa Madbouly said during a presser (watch, runtime: 10:43) with the IMF’s managing director Kristalina Georgieva attended by EnterpriseAM yesterday. The news came during Georgieva’s second day of talks in Egypt following her arrival on Saturday.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

It's been a while since the third review: The Fund completed its third review of the country’s loan program in late July and the USD 820 mn tranche landed in state coffers just days later. The fourth review, which was initially scheduled for September, is set to unlock USD 1.3 bn in funds — the biggest of the four tranches to date.

What will the fourth review look like? Georgieva mentioned three main areas that will be subject to discussions during the review, pointing to “what more can be done for a resilient Egyptian economy for macroeconomic and financial stability and how to make sure inflation continues on the way down; What more can be for the private sector to flourish; How can we support Egyptian objectives in the area of greening the economy.”

The talks also gave some insight into how the IMF views the nation’s economic reforms: President Abdel Fattah El Sisi and the IMF chief’s meeting prior to the presser yesterday struck a largely positive tone, with Georgieva saying that Egypt's macroeconomic indicators have improved despite significant regional and international headwinds. She singled out as particularly positive signs the country’s recent credit rating upgrade, positive outlooks from international rating agencies, and increased investment.

Getting inflation under control is key: Georgieva also noted in the readout of her meeting with El Sisi that the Fund agrees with its Egyptian counterparts that tackling inflation needs to be a key priority for the government and its international partners. Rising energy costs — a substantial part of which is accounted for by fuel prices — have been acknowledged as driving two consecutive monthly upticks in inflation.

Georgieva defended the reform program overall, saying at the press conference that the reforms had made Egypt safer in a world marked by economic shocks. “Reforms are not easy. I would like to recognize the efforts of the government and recognize the Egyptian people … I have full confidence that you will see the full benefit of these reforms in a more dynamic, more prosperous Egyptian economy,” she said.

Could we finally unlock climate financing from the fund? The IMF team will be discussing green financing through its Resilience and Sustainability Facility next week, Georgieva said. The government applied for an additional USD 1.2 bn in long-term, low-cost climate financing from the IMF's Resilience and Sustainability Facility back in August

The background: The IMF head’s visit comes as the state seeks to renegotiate the terms of the USD 8 bn loan agreement. President Abdel Fattah El Sisi last month stated that the country might need to revisit the IMF agreement in light of the economic pressures the country is facing as it undergoes agreed-upon reforms.

The news caught the attention of the foreign press: Reuters | The National.