Prime Minister Mostafa Madbouly has announced that the International Monetary Fund (IMF) will start its long-delayed fourth review of Egypt’s 46-month loan programme.
Initially, the review was supposed to take place at the end of September 2024. To assist Egypt in managing its economic difficulties, Cairo and the IMF signed an agreement in April that increased the initial loan from USD 3 billion to USD 8 billion. Around USD 1.02 billion in new funding will be made available through the fourth review.
Madbouly stated that the IMF team would begin working on the review “with Egypt’s central bank and relevant ministries” during a joint news conference in Cairo with Kristalina Georgieva, managing director of the IMF.
In a boost for the country, Kristalina Georgieva also announced that Egypt has successfully implemented a flexible exchange rate system, praising the efforts of the Central Bank of Egypt (CBE).
“Egypt has successfully implemented a flexible exchange rate system. The dedication and the vigour of the measures Egypt has already taken,” Georgiava said, while adding, “We have seen positive results from these reforms. We are confident that Egypt will continue to see a dynamic and prosperous economy as a result of these reforms.”
She also mentioned strengthening “the role of the private sector as a source of growth and jobs,” shifting to “a flexible exchange rate regime,” and strengthening “social protection by moving away from untargeted subsidies,” as she further noted that the global monetary body had increased the size of its programme with Egypt from USD 3 billion to USD 8 billion in April, recognising the increasing challenges and difficulties being faced by the country due to global circumstances.
According to Kristalina Georgieva, “The conflict in your neighbourhood has made things more difficult, and it’s not your fault,” as she also stressed the importance of a three-pronged approach to achieving further economic success: ensuring macroeconomic stability, promoting private sector growth, and fostering a green economy.
Kristalina Georgieva met with President Abdel Fattah El-Sisi earlier on November 3. According to a presidential statement, El-Sisi stated that Egypt “would prioritise easing the burden of inflation on citizens,” emphasising the need to curb price increases, draw in investments, and empower the private sector.
Following a September inflation rate of 26.4%, the government increased fuel prices by up to 17% last month.
If there is “unsustainable public pressure,” El-Sisi stated in October, his government may reevaluate the loan programme.
He mentioned the persistent instability in the region, especially the protracted conflict in the Gaza Strip, as a challenge.
According to Kristalina Georgieva, Egyptians “will see the benefits of these reforms in a more dynamic, more prosperous Egyptian economy,” even though living expenses are on the rise.
Meanwhile, rising costs, coupled with an uptick in selling prices, affected growth in Egypt’s non-oil sector, causing a dampening effect on new order volumes, according to October’s S&P Global Purchasing Managers’ Index (PMI).
The decline in business activity was marginally offset by mild expansions in firms’ stock levels and employment during October 2024. The rate of input cost inflation also eased back from September’s six-month high, resulting in the PMI rising fractionally to 49.0 from September’s 48.8.
However, the recorded PMI was still below the 50.0 threshold for the second month running, signalling a deterioration in overall conditions.
“Sales declined due to weakening market conditions, with sector data also suggestive of a widespread downturn, with the most pronounced cuts in activity and sales seen among construction firms. A sharp uptick in the cost of inputs such as raw materials and utilities, triggered the rise in selling prices, according to survey data, impacted by a strong US dollar value on import prices,” Zawya reported.
Non-oil businesses also expanded staffing levels for the fourth consecutive month, with the pace of job creation picking up to the fastest since May 2024. Firms also started to build inventories to hold items in reserve amid cost concerns. Total input purchases also fell for the first time in three months, which helped ease some supply pressure, survey data revealed further.