The third review of Egypt's economic reform programme would be completed before the end of June, followed by the disbursement of a new tranche of the loan worth up to $820 million, Ivanna Vladkova Hollar, head of the International Monetary Fund mission to Egypt told Amwal Al Ghad Arabic on Monday. Last week, the IMF announced the completion of the first and second reviews of the extended arrangement with Egypt, along with approving an increase in the loan amount from $3 to $8 billion. The IMF explained that this allows Egypt to immediately draw about $820 million (618.1 million special drawing rights) and Prime Minister Mustafa Madbouly stated that the value of the first tranche after the review will be received this week. The IMF noted that with the completion of the review, the Executive Board valued that Egypt had met all quantitative performance criteria by the end of June 2023 except for one. The Council approved the Egyptian government's request for an exemption from considering the performance criterion for June regarding net international reserves based on corrective measures. The IMF pointed out that Egypt's macroeconomic conditions since the programme's approval have been challenging, with inflationary pressures, foreign exchange shortages, rising debt levels, and financing needs, exacerbated by the difficult external environment resulting from the Russia/Ukraine conflict along with the Gaza war, as well as tensions in the Red Sea. These developments have compounded the complexity of macroeconomic challenges and called for decisive policy actions supported by a stronger external financing package, including from the IMF. The IMF confirmed that external shocks and delayed policy adjustments have affected economic activity, leading to a slowdown in growth to 3.8 per cent in the fiscal year 2022/2023 due to weakened confidence and foreign exchange shortages. It is expected to further slow down to 3 per cent in the fiscal year 2023/2024 before recovering to around 4.5 per cent in the fiscal year 24/25, with inflation remaining high but expected to decline in the medium term as policy tightening continues. Regarding the Ras Al Hikma development project, the IMF stated that the recent $35 billion investment deal announced by an Abu Dhabi-based investment and holding company in Ras Al Hikma would alleviate pressures on the balance of payments in the near term, and if used wisely, it would help Egypt rebuild safety margins to deal with future shocks. It emphasised that consistent implementation of economic policies within the program framework is crucial for sustainably addressing Egypt's macroeconomic challenges, as well as strong implementation of structural reforms to allow the private sector to become a growth engine.
