Washington, DC – The International Monetary Fund (IMF) announced Tuesday that it has reached a staff-level agreement with Egyptian authorities on the fifth and sixth reviews of the Extended Fund Facility (EFF) program. This agreement paves the way for the disbursement of approximately $2.5 billion.
Integrating reviews and expanding funding
The IMF explained in its statement that it had decided to combine the fifth and sixth reviews. The aim of this combination is to give the Egyptian government greater time flexibility to achieve key structural objectives. In parallel, an agreement was reached on the first review of the Resilience and Sustainability Facility program. This agreement could unlock an additional $1.3 billion in financing for Egypt.
With this, the total anticipated funding, after approval by the Fund’s Executive Board, will reach $3.8 billion.
Indicators of economic recovery
The head of the IMF mission to Egypt, Ivana Vladkova-Hollar, praised the country’s stabilization efforts, noting that the Egyptian economy is beginning to show “signs of strong growth.” The statement highlighted Egypt’s success in curbing inflation, which has fallen from its peak of 38% in September 2013 to 12.3% last November.
Factors that contributed to easing the currency crisis
Cash flows from the IMF program.
Tourism revenues reached record levels.
Growth in remittances from Egyptians abroad.
Major investment deals, especially with Gulf countries such as the UAE.
Existing challenges: divesting state assets
Despite praising indicators of stability, the IMF stressed the need to accelerate structural reforms. Holler emphasized that progress in divesting state-owned assets remains slow. She called for further efforts to reduce the state’s role in the economy and ensure a level playing field for the private sector.
It is worth noting that Egypt approved legislative amendments last August aimed at accelerating the pace of asset sales. This was in fulfillment of its obligations under the $8 billion loan, of which approximately $3.5 billion has been disbursed so far.
