IMF demands reform in Egypt

Egypt must implement more reforms before the International Monetary Fund (IMF) conducts the first review of the country’s $3bn rescue package, according to Bloomberg News. The IMF wants Cairo to privatise some state assets and allow greater flexibility in the Egyptian pound to ensure the review’s success, Bloomberg said, citing unnamed sources. Egypt needs to pass the review to access the second tranche of its loan, worth around $354m. The IMF said in December it would provide $3bn to debt-ridden Egypt over nearly four years.

Jihad Azour, the IMF’s director for the Middle East, North Africa and Central Asia, said last week that a flexible exchange rate would help protect Egypt’s economy from external shocks and the state should allow the private sector to “create growth and create more foreign currencies”. Gulf allies, including Saudi Arabia, Qatar and the United Arab Emirates, have also offered support. However, billions of dollars in pledged investments have yet to materialise, as they seek clarity on the country’s financial reforms.

As part of the IMF deal, Cairo has agreed to sell stakes in several dozen state-owned companies this year and pledged to shift to a flexible exchange rate. Egypt’s economy has been hit hard by rising oil and food prices due to the COVID-19 pandemic and the war in Ukraine. About one-third of the country’s 104 million people live in poverty, according to government figures. Many Egyptians depend on state subsidies to keep basic goods like food affordable.

IMF Managing Director Kristalina Georgieva said last week that the fund was preparing to carry out the review but did not give a timeframe. Egypt’s pound has lost half of its value against the dollar since March, while its stability has raised questions about the government’s commitment to its reforms.