Egypt Daily News – Egyptian Finance Minister Ahmed Kouchouk said on Monday that the International Monetary Fund (IMF) has approved the disbursement of the fourth tranche of Egypt’s loan.
The IMF reached an agreement with Egypt in December regarding the fourth review of its $8 billion Extended Fund Facility program, allowing Cairo to receive approximately $1.2 billion, subject to the approval of the IMF’s Executive Board—which was granted today, according to Kouchouk.
In March 2024, Egypt successfully increased the size of its IMF program from $3 billion to $8 billion after facing a severe foreign currency crisis since early 2022.
Recently, the Egyptian government has reduced subsidies on many essential goods and services in an effort to cut the budget deficit and prevent another dollar shortage. Since July, it has raised prices for gasoline, diesel, train and metro tickets, followed by increases in various other goods and services, including telecommunications.
In March, it allowed the Egyptian pound to depreciate by 40% and raised interest rates to a record high. According to IMF documents, Egypt requested a recalibration of its medium-term fiscal commitments under this review, citing difficult external conditions and a challenging domestic economic environment.
In this respect, the primary balance surplus (excluding divestment proceeds) is projected to reach four percent of GDP in FY2025/2026, which rolls out on 1 July, (½ percent of GDP less than earlier program commitments) and then increase to five percent of GDP in FY2026/2027, in line with earlier commitments.
“This short-term recalibration seeks to ensure that fiscal consolidation provides some space to increase critical social programs in support of vulnerable groups and the middle class while ensuring debt sustainability,” read the IMF documents.
Egypt must implement fiscal consolidation to maintain debt sustainability and reduce high-interest costs and overall domestic financing requirements.
