An International Monetary Fund delegation extended its visit to Egypt until the end of this week to try to hash out an economic bailout program for the North African country that could be worth $10 billion.
Egypt is looking to increase its $3 billion IMF program to address its worst economic crisis in decades. Since early 2022, the Egyptian pound has been devalued three times by the government, losing half of its value against the dollar, and public debt has ballooned since Russia’s invasion of Ukraine in February 2022. There has also been a dire shortage of foreign currency coming into the country as international investors withdraw their capital or demand high interest rates to keep it there. The war in the neighboring Gaza Strip along with Red Sea instability have also been worsening Egypt’s economic prospects.
Only a small fraction of the 46-month $3 billion extended fund facility the Washington-based lender approved in December 2022 has been disbursed. Part of that agreement included Egypt introducing monetary policies to drop the country’s high inflation rate, which currently sits at 34%. Egypt was also expected to switch to a flexible exchange rate regime and reduce government spending.
The government of North Africa's largest economy is currently negotiating to extend the program to at least $10 billion, with other players including the World Bank potentially being involved, Bloomberg reported Friday, citing people familiar with the matter. The agency reported that flotation of the Egyptian pound might be a condition on the table.