IMF says additional financing for Egypt ‘critical’ for success of loan program

By David Lawder

WASHINGTON (Reuters) – The International Monetary Fund on Thursday said it was holding discussions with Egypt on policies that would make the country’s $3 billion IMF program successful, but that additional financing would be “critical.”

IMF spokesperson Julie Kozack told a regular news briefing that financing amounts and potential disbursements to the North African country are currently under discussion. Discussions with Egyptian authorities about policy enhancements would continue over the coming weeks, including on the need for tighter fiscal and monetary policy as well as movement toward a flexible exchange rate policy, Kozack added.

She gave few details on a meeting on Tuesday between IMF Managing Director Kristalina Georgieva and Egypt’s finance minister and central bank governor but said discussions were continuing on policies that would allow the completion of the first and second reviews of the loan program agreed to in December 2022.

“This strong engagement that we’ve had with the authorities has helped achieve important progress in the discussions and we do expect those discussions to continue in the coming weeks to operationalize the key policy priorities,” Kozack said.

“At the same time, additional financing will be critical to ensure successful program implementation,” she added.

Egypt’s $3 billion loan program faltered after the country failed to let its currency float freely or make progress on the sale of state assets.

Already facing high foreign debt levels, Egypt has also been hit hard by the war in the neighboring Gaza Strip, which threatens to disrupt tourism bookings and natural gas imports, as well as recent attacks on Red Sea ships.

“Egypt already faces a complicated and challenging macroeconomic situation. And that situation has been made more complicated by the conflicts between Israel and Gaza,” Kozack said, adding that this was evidenced in disruptions on Red Sea shipping and Egyptian tourism.

(Reporting by David Lawder; Editing by Mark Porter)