On January 10, the Executive Board of the International Monetary Fund approved a $3 billion loan, provided that some conditions are approved as the loan is part of a $9 billion financing plan, which is expected to include $1 billion from the Sustainability Fund and $5 billion, by state development partners.
During the negotiations that took place last year between the Egyptian government and the International Monetary Fund, Egypt agreed on several conditions to give approval for the IMF loan.
You can find out the full details of the decision here.
Terms of the Executive Board of the International Monetary Fund .
- The International Monetary Fund agreed that additional financing is provided in the program supported by the Fund, which is a 46-month program worth $3 billion.
- Egypt obtained the first instalment of the loan, and the value of the financing payment amounted to 347 million dollars last December, as the instalments will be of the same value starting from the current year in March and September of each year.
- The semi-annual reviews are in June and December, as Egypt will have obtained the total loan value in September 2026 after eight reviews from the International Monetary Fund .
- The agreement with the International Monetary Fund includes a permanent shift to a flexible exchange rate system because the presence of flexibility in the local currency exchange rate system against foreign currencies will increase flexibility to face external shocks concerning the pound.
- The International Monetary Fund policy seeks to limit the continuation or gradual reduction of inflation in the Egyptian market.
- The fund will catalyze an additional $14 billion in financing from Egypt’s international and regional partners, especially the Gulf.
- Implementation of structural reforms on a large scale in the economy.
- Automatically linking fuel prices with international prices, and examining the mechanism for linking natural gas prices with international prices, in addition to imposing additional taxes on fuel prices.
Was the IMF loan approved?
The International Monetary Fund loan has already been approved, and the country will work to collect cash flows from Egypt’s foreign partner countries in order to bridge the remaining financing gap, which is estimated at about 5.04 billion.
Egypt will work to bridge this gap by borrowing from more than one financing institution such as the World Bank, the African Development Bank, the Asian Bank, the Arab Monetary Fund and the China Development Bank.
In addition, Egypt will sell $2 billion worth of its assets to foreign investors, especially the Gulf Cooperation Council countries, who have pledged not to claim Egypt’s deposits in the Central Bank of Egypt worth up to $28 billion until September 2026.
The Egyptian government has agreed to implement the shift to a flexible exchange rate, but there will be no recourse to foreign exchange interventions or the use of banks’ net foreign assets.
What is the benefit of the International Monetary Fund loan for Egypt?
The head of the International Monetary Fund’s mission to Egypt, Ivana Vladkova Hollar, explained that the program aims to provide Egypt with a balance of payments and budget support while stimulating additional financing from Egypt’s international and regional partners to maintain economic stability, address macroeconomic imbalances and indirect repercussions of the war in Ukraine, and protect livelihoods. , and push forward the deep structure and governance. Reforms to promote private sector-led growth and job creation.
What are the investment opportunities that resulted from the fund's decision?
New investment opportunities have recently appeared in Egypt as a result of the state’s agreement on the IMF loan, and the fund’s stimulation of financing from partners to Egypt by about $14 billion, and evidence of this is that it was revealed by recent data that Arab investors began to compete more with the countries of the Union European Union in foreign investment flows to the Egyptian market, according to a periodic bulletin published by the Central Agency for Public Mobilization and Statistics.
Investment flows from Arab countries to the Egyptian market amounted to about $1.5 billion, and that was during the fourth quarter of the last fiscal year 2021-2022, which is equivalent to 31.3% of the total investment inflows into Egypt during that period, which is also equal to investment flows from the European Union. In the Egyptian market, which amounts to 1.5 billion dollars.
The Central Bank also revealed that Egypt has obtained new investments, and the bank has monitored the entry of foreign investors into the Egyptian market again since last Wednesday, with amounts exceeding $925 million, according to the bank’s statement today, last Monday.
The bank stated that the net inflow of foreign direct investment into Egypt reached $3.3 billion in the current fiscal year 2022-2023.
For 30 years, AHG Group has become one of the largest certified accounting firms in Egypt, the MENA region and Europe.
We specialize in the formation of companies in Egypt and the establishment of free zone companies in Egypt (public and private). Drawing on our proven track record and a team of around 100 talented employees, we offer a wide range of services that include auditing, bookkeeping, risk management, business formation, feasibility studies, software solutions, HR consulting and payroll preparation. Furthermore, AHG is a proud member of the Morison Global network and our CEO He is a board member.
We care and listen to your vision, challenges and needs in order to provide the right advice. Your business organization needs a reliable problem solver, law/regulatory expert who can guide your business to success while exchanging the global market. We believe in entrepreneurship and value innovation. Also, we understand that innovative ideas require dedicated builders who are able to make dreams a profitable reality.
