A new 3 billion USD loan has been agreed between the International Monetary Fund and Egypt, Reuters reports.
The so-called “Extended Fund Facility (EFF)” will run over 46 months and is supposed to provide “durable exchange rate flexibility”, with Egypt promising to boost social protection with the funds.
Wheat and oil price increases due to Russia’s invasion of Ukraine, which also caused tourism from Russia and Ukraine to fall have worsened Egypt’s already dire financial situation.
The IMF commented:
“The program will include policies to unleash private sector growth including by reducing the state footprint, adopting a more robust competition framework, enhancing transparency, and ensuring improved trade facilitation”
“The Central Bank of Egypt (CBE)’s move to a flexible exchange rate regime is a significant and welcome step to unwind external imbalances, boost Egypt’s competitiveness, and attract foreign direct investment. The commitment to durable exchange rate flexibility going forward will be a cornerstone policy for rebuilding and safeguarding Egypt’s external resilience over the long term.”
Today, Egypt agreed on a $3 bn loan with the IMF after its CB devalued the pound by ~14.8% & claimed it would adopt a more flexible exchange rate regime. But, an IMF deal won't solve EG's inflation woes. Today, I measure #inflation at a SKY-HIGH 59%/yr. https://t.co/p6pHBZCLkj
— Steve Hanke (@steve_hanke) October 27, 2022