Egypt and International Monetary Fund Continue Talks on Economic Reforms

The International Monetary Fund (IMF) has affirmed that talks with Egypt to enhance the IMF program loan are making excellent progress, noting that the country needs a comprehensive support package to deal with the pressure caused by the displacement of refugees due to the war in Gaza.

The spokesperson for the International Monetary Fund, Julie Kozak, said in a regular press conference yesterday that the IMF team and Egyptian authorities have agreed on the key elements of the program amendment, within the framework of the first and second reviews which have been combined for Egypt’s current $3 billion loan, confirming that the Egyptian authorities have expressed strong commitment to it.

Kuzak refrained from discussing the details of the Egyptian package because the negotiations are still ongoing. Regarding the pressures imposed by the issue of refugees from Gaza on the talks, Kuzak said: “There is a need for a very comprehensive support package for Egypt.”

She added: “We work closely with both the Egyptian authorities and their partners to ensure that Egypt has no remaining financing needs, as well as to ensure the program’s ability to achieve macroeconomic stability and financial stability in Egypt.”

The International Monetary Fund reduced its growth forecasts for the Middle East and North Africa in 2024 to 2.9 percent in January, down 0.5 percentage points from its October projections, due to the negative economic effects of the war between Israel and Hamas. Growth forecasts for Egypt in 2024 also decreased by about 0.6 percentage points to three percent.

Cossack stated that the fund continues to monitor the economic impact of the Red Sea attacks on both the Suez Canal and shipping movement in the Red Sea, which divert trade flows from the canal to the Cape of Good Hope route in southern Africa, consuming more time and cost in trips between Europe and Asia.

The Port Watch platform, affiliated with the fund, indicates that shipping traffic through the Suez Canal in the seven days ending on February 13 decreased by 55 percent compared to the same period last year, while shipping traffic around Cape of Good Hope increased by about 75 percent.

According to Crystalina Georgieva, the director of the fund, earlier this month, Egypt used to collect around $700 million monthly in fees for crossing the Suez Canal before the war, and now loses hundreds of millions of dollars monthly due to the attacks by Houthi militants on shipping in the Red Sea.