Egypt completed a much-anticipated review of its expanded International Monetary Fund loan program, unlocking $820 million in support for an economy emerging from its worst crisis in decades.
“The Egyptian authorities’ recent efforts to restore macroeconomic stability have started to yield positive results,” the IMF said in a statement Monday in Washington after its board ratified a preliminary agreement reached last month. It added that fiscal targets including those related to spending on large infrastructure projects have been met.
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The IMF deal along with a mammoth United Arab Emirates investment are the cornerstones of a $57 billion global bailout that’s offering the Middle East’s most populous nation a fresh start after two years of uncertainty.
The Washington-based lender in March increased Egypt’s existing $3 billion loan deal to $8 billion, as the IMF weighed the impact of the Israel-Hamas war on some of Egypt’s key streams of foreign revenue such as tourism and Suez Canal fees.
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The IMF, which releases the financing in tranches after periodic reviews, said last month Egypt should maintain its focus on trimming its deficit and providing targeted social spending. Changes are already underway for subsidy programs used by a majority of the country’s 105 million-plus people as the government reins in spending.
Authorities last week hiked the prices of a range of fuel products by as much as 15%, part of incremental increases they signaled will continue until December 2025. The price of subsidized bread was also raised in June for the first time in decades, while an increase in electricity tariffs is widely expected.
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The IMF has reiterated the importance of maintaining what it calls a flexible exchange rate regime. Authorities allowed the Egyptian pound to lose nearly 40% of its value against the US dollar in early March, just before the IMF deal was announced.
“The unification of the exchange rate and the accompanying monetary policy tightening have curtailed speculation, brought in foreign inflows, and have moderated price growth,” the IMF said in its statement. “With signs of recovery in sentiment, private sector growth should be poised for a rebound.”