Rédaction Africa Links 24 with Egypt Independent
Published on 2024-03-07 11:43:53
Prime Minister Mostafa Madbouly made a significant announcement on Wednesday regarding Egypt’s agreement with the International Monetary Fund (IMF). The agreement involves increasing the value of Egypt’s funding from three billion to eight billion dollars, showcasing the country’s commitment to financial stability and growth.
Furthermore, an agreement was reached with IMF experts regarding the first and second reviews under the IMF’s Extended Fund Facility (EFF). This development follows extensive efforts by the government, including a significant devaluation of the currency and an increase in interest rates.
The announcement came shortly after the Central Bank of Egypt (CBE) allowed the pound to devalue against the US dollar for the first time in over 14 months. This decision was made in conjunction with a surprise move to raise interest rates by 600 basis points.
After signing the agreement with the IMF, Prime Minister Madbouly mentioned that Egypt is now eligible to apply for a loan of approximately $1.2 billion from the IMF’s Environmental Sustainability Fund. This additional loan brings the total funding provided by the IMF after signing the agreement to $9.2 billion.
Moreover, the Prime Minister emphasized that following the agreement, other international partners such as the World Bank and the International Union are expected to provide soft loans to Egypt under an integrated program aimed at achieving monetary stability.
During a press conference, Ivana Vladkova Holer, the head of the IMF mission to Egypt, explained that the IMF’s financial package is designed to maintain sustainability and strengthen the exchange rate system in Egypt. She noted Egypt’s strong commitment to swiftly implementing the reform aspects supported by the fund.
Holer highlighted that Egypt’s authorities have taken decisive steps towards adopting a flexible exchange rate system by unifying the official exchange rate with the parallel market. This shift is expected to bolster Egypt’s resilience to external shocks and assist the government in managing inflation over time.
In light of these developments, the decision to tighten monetary policy by 600 basis points was viewed as a positive step, especially after a 200 basis point interest rate hike earlier in the year. The comprehensive efforts by the Egyptian government, in collaboration with international institutions like the IMF, signify a dedicated approach towards reinforcing the country’s economic stability and fostering sustainable growth.
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