Egypt, IMF reach preliminary agreement for $3 billion loan

Global markets have been disrupted by the outbreak of the coronavirus and the war in Ukraine, adversely impacting the Egyptian economy. Egypt is the world’s largest wheat importer, and most of it has traditionally come from Russia and Ukraine. Since the country’s supply is reliant on international market prices, those prices can change at any time.

Egypt has reached a preliminary agreement with the International Monetary Fund, clearing the way for the financially troubled Arab country to receive a $3 billion loan, officials said Thursday.

After months of negotiations, IMF officials said a “staff agreement” between the Egyptian government and IMF leaders had been reached, as Egypt tries to control rising prices caused, in part, by the war in Ukraine.

Egypt’s IMF Mission chief, Ivanna Vladkova Hollar, said in a statement released Thursday that the 46-month programme—known as an Extended Fund Facility Arrangement—would provide Egypt with $ 3 billion in loans provided that it implemented certain economic reforms.

Prior to the declaration, Egypt’s central bank issued a series of economic measures, including a 2% increase in key interest rates and a switch to a more flexible exchange rate system.

“Holler welcomed the Central Bank of Egypt’s move to a flexible exchange rate regime as a significant step toward reducing external imbalances, enhancing Egypt’s competitiveness, and attracting foreign direct investment.”

The economy of Egypt has been negatively affected by the outbreak of the coronavirus, which has disrupted global markets and increased oil and food prices worldwide, as well as by the war in Ukraine, which has disrupted global markets and increased oil and food prices worldwide. Because Egypt is the world’s largest wheat importer, a lot of which comes from Russia and Ukraine, the country’s supply is sensitive to international market conditions.

Image Credit: Bruno Sanchez-Andrade Nuño