The International Monetary Fund (IMF) has approved a $1.2 billion payment to Egypt after the successful completion of the fourth review of Egypt’s $8 billion economic reform program.
Moreover, the IMF executive board also provided Egypt with access to around $1.3 billion through the Resilience and Sustainability Facility (RSF), based on a statement that was issued by the lender. Egypt requested funding via the RSF since 2022 as it sought to get up to another $1 billion.
The news arrives as Egypt witnesses a steep decline in inflation, partly attributed to financial reforms that have been rolled out under the IMF-supported program. Official statistics indicated that urban consumer price inflation on an annual basis dropped steeply from 24.0% in January to 12.8% in February. Core inflation also plummeted, declining from 22.6% to 10% year-on-year.
Market commentators and economists foresee that, driven by the IMF deal and highest-ever investments of the United Arab Emirates, international investors will have no hesitation rolling over their position in Egyptian government bonds.
Egypt has been battling economic issues, such as runaway inflation and a chronic shortage of foreign currency. Egypt signed an extended IMF program in March 2024 to stem these issues. Adding to its financial woes on top of that, a dramatic fall in Suez Canal revenue resulting from regional instability has placed further economic pressure in the last year.
The IMF financing and foreign investments are likely to be the key lifeline as Egypt keeps pursuing economic reforms to stabilize its economy.
