IMF kicks off its fourth review of the country’s loan program: An International Monetary Fund mission has begun its long-awaited fourth review of Egypt’s USD 8 bn loan program, which if successfully completed would unlock USD 1.3 bn in funds — the biggest of the four tranches Egypt has received from the program to date, a high-ranking government official told EnterpriseAM.

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ICYMI- 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.

What’s on the agenda? The Fund will conduct visits to the ministries involved in the implementation of the program to assess progress made on the financial and economic fronts, as well as its social impact. Exchange rate flexibility will be discussed with the Central Bank of Egypt, with social protection efforts also on the Fund’s agenda, the source said.

The EGP’s stability in the face of regional tension has raised questions: Investors have reportedly been pressing the IMF for an explanation regarding the EGP’s stability amid regional shocks and in light of Egypt’s pledges to maintain a flexible exchange rate.

It has been a tough week for the EGP, which started the week at 49.03 against the greenback and is now going for 49.21, according to the central bank’s exchange rate.

The review and talks to adjust the program are likely to proceed separately: The fourth review is likely to be separate from talks that aim to revise the timeline and targets of reforms previously agreed upon with the Fund, another informed source told us. The IMF will, however, consider requests to change timelines and targets as the review takes place over the next two weeks.

Remember: 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 IMF has expressed willingness to revisit the terms of the agreement, with IMF managing director Kristalina Georgieva saying last week that the Fund has “been very open to adjust the Egyptian program or any other program to what is best to serve people.”

The priorities for the review: Georgieva mentioned during a presser attended by EnterpriseAM this week the main areas that will be subject to discussions during the review, including helping Egypt achieve greater economic stability and lower inflation, increasing private sector growth, and supporting Egyptian objectives in the green economy.

There’s already been a considerable shift in policy: There’s an ongoing transformation in how officials are managing fiscal and monetary policy, one source told us, adding that it has reorganized its spending priorities and its management of public debt — especially domestic debt — amid the significant challenges posed by high interest rates. The public debt strategy has consequently undergone comprehensive changes since the beginning of the current fiscal year, leading to significantly reduced debt service payments, the source said.

Remember:Egypt’s debt service bill dipped (5.4% y-o-y in 1Q 2024-25, contributing to a decline in the budget deficit.

Giving improved tax collection its fair due: The new debt strategy has been supported by the government’s digital transformation and automation efforts, which have collectively boosted tax revenues, the source added.

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