Egypt to Receive $820 Million from IMF After 3rd Review

The Executive Board of the International Monetary Fund (IMF) has concluded the third review of Egypt’s Extended Fund Facility (EFF), allowing Egyptian authorities to access approximately $820 million immediately. The 46-month EFF arrangement, initiated on December 16th, 2022, has seen improving macroeconomic conditions since the combined approval of its first and second reviews in March.^[1]  

Key achievements include easing inflationary pressures, resolving foreign exchange shortages, and meeting fiscal targets, particularly related to significant infrastructure projects. These developments have bolstered investor confidence and private sector sentiment amid ongoing regional tensions and domestic challenges.

In March, Egypt secured an $8 billion deal with the IMF, hours after the central bank weakened its currency and delivered a 600-basis point rate hike. 

The move followed closely on the heels of the announcement of a $35 billion investment initiative by Abu Dhabi-based ADQ to develop Egypt's Ras El-Hekma region.

A more flexible exchange rate had been a key demand of the IMF. Egypt has previously said it would shift to a more flexible exchange rate, only to return to closely managing the currency whenever the EGP weakened. It is not clear if the same pattern will be repeated this time.

Egypt has been struggling with an economic crisis since 2022, with soaring inflation, which reached a record high of nearly 40% last August. In addition to dire foreign currency shortages, which have caused some businesses to completely halt or slow their operations in Egypt as the cost of imported goods soared and foreign currency availability dwindled. Israel's war on Gaza and the Red Sea unrest as a result of the Houthi attacks have also added to economic pressures on Egypt.