22 May, 2024
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Egypt, IMF agreement on new loan might be accompanied with Egyptian pound devaluation

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Capital Economics, an independent economic research business based in the UK, noted that Egypt’s agreement with the International Monetary Fund (IMF) for the next loan is on the way – and with it, a devaluation of the Egyptian pound.

Inflation in Egypt is slowing down, according to the report but will remain above the central bank’s target level until mid-2025, according to the Arab News Agency.

Capital Economics also noted that the talks between Egyptian officials, the US Treasury Department, and the IMF seem “positive”.

US Treasury Secretary Janet Yellen pledged to support Egypt’s economy and reforms following a meeting with senior Egyptian financial officials in Washington, DC on Tuesday – amid talks to increase the IMF’s three billion dollar loan to Cairo.

IMF Managing Director Kristalina Georgieva said earlier in November that the fund is “seriously considering” increasing Egypt’s billion loan program as it struggles with the economic impact of the Israeli war in Gaza.

Egypt is already suffering from high levels of foreign debt and has been severely affected by the war in the Gaza Strip, which threatens to decrease tourism bookings and negatively impact its natural gas imports.

Egyptian Prime Minister Mostafa Madbouly back in December said that discussions with the International Monetary Fund (IMF) have not stopped, and emphasized that the economic reform program is purely national.

He continued in a press conference, “There may be disagreement and controversy over the tactics that are being dealt with. Communication is ongoing, and we are in the process of working with the Fund to develop a time plan that will be announced soon.”

The International Monetary Fund back in October lowered its growth forecast for the Egyptian economy during the current fiscal year 2023-2024 to 3.6 percent, compared to its previous estimates of 4.1 percent.

The IMF announced at the time at the Moroccan capital, Marrakesh that the 2024 World Economic Outlook Report indicates an overall slowdown in global economic growth from 3.5 percent in 2022 to three percent in 2023 and 2.9 percent in 2024.

The report said that global growth expectations are still below the historical average of 3.8 percent in recorded the period in 2000-2019.

The IMF’s expectations for 2024 decreased by 0.1 percentage point from the July 2023 World Economic Outlook report.

 

The post Egypt, IMF agreement on new loan might be accompanied with Egyptian pound devaluation appeared first on Egypt Independent.

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