Progress has been made in the conversations between Egypt and the IMF

The International Monetary Fund has confirmed that discussions with Egypt to enhance the IMF loan program are making excellent progress, noting that the country needs a comprehensive support package to address the pressures posed by the displacement of refugees due to the war in Gaza.

In a press conference yesterday, the spokesperson for the International Monetary Fund, Julie Kozak, stated that the IMF team and the Egyptian authorities have agreed on the key elements of the program adjustment within the framework of the first and second reviews that have been combined for Egypt’s current $3 billion loan, affirming that the Egyptian authorities have shown strong commitment to it.

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

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

The International Monetary Fund reduced its forecast for GDP growth in 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 impact of the war between Israel and Hamas. Growth expectations for Egypt in 2024 also decreased by about 0.6 percentage points to three percent.

Kozak said that the fund continues to monitor the economic impact of the Red Sea attacks on both the Suez Canal and shipping traffic 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 higher costs in trips between Europe and Asia.

According to the Data platform “Port Watch”, which is affiliated with the Fund, shipping traffic through the Suez Canal in the seven days ending on February 13 decreased by 55 percent compared to the same period of the previous year, while shipping traffic around the Cape of Good Hope increased by about 75 percent.

Earlier this month, Kristalina Georgieva, the director of the fund, stated that Egypt used to collect around $700 million monthly in fees from the Suez Canal before the war, and is now losing hundreds of millions of dollars monthly due to attacks by Houthi militants on shipping in the Red Sea.