The IMF has approved $1.2 billion for Egypt after the fourth review of its economic reform program. An additional $1.3 billion was also approved under the RSF. Recent reforms helped halve headline inflation, with significant foreign investment expected in treasury bonds despite ongoing economic challenges.
The International Monetary Fund (IMF) has sanctioned a disbursement of $1.2 billion to Egypt following the completion of the fourth review of its $8 billion economic reform program. Additionally, the IMF’s executive board confirmed Egypt’s request for an arrangement under the Resilience and Sustainability Facility (RSF), granting access to approximately $1.3 billion. This request has been in place since 2022, with prospects of unlocking up to another $1 billion in financing.
In February, Egypt reported a significant drop in headline inflation, which nearly halved due to the financial reforms associated with the IMF agreement. Specifically, annual urban consumer price inflation fell to 12.8% in February, down from 24.0% in January. Core inflation also decreased more than anticipated, reaching 10% year-on-year in February, down from 22.6% the previous month.
Analysts and bankers anticipate that, driven by the IMF deal and substantial investments from the UAE, foreign investors will generally maintain their holdings in Egyptian treasury bonds. The country has been facing challenges such as high inflation and foreign currency shortages, with an expanded IMF program agreed upon in March 2024. Contributing to these problems has been a notable decline in Suez Canal revenue due to ongoing regional tensions over the past year.
The IMF has approved $1.2 billion in additional funding for Egypt, along with a significant arrangement under the RSF, which aims to stimulate the economy amidst high inflation and foreign currency shortages. Recent financial reforms have led to a marked decrease in inflation rates, with expectations that foreign investment in treasury bonds will be sustained. Egypt’s economic challenges are compounded by declining Suez Canal revenues amid regional tensions.
Original Source: www.tradingview.com
