After months of talks, IMF-Egypt reach preliminary agreement for $3 billion loan, more details inside

The International Monetary Fund has agreed to a $3 billion loan to Egypt, reaching a preliminary agreement with Cairo on Thursday. The fresh loan from IMF would help the Middle Eastern country to fight its economic troubles. The agreement is a result of extensive talks that went on for months as inflation in Egypt skyrocketed, majorly due to the Ukraine war.

In an official statement, IMF Chief for Egypt, Ivanna Vladkova Hollar, said that the Extended Fund Facility Arrangement, a 46-month deal, would allow the $3 billion loan. However, the loan is being granted on the strict condition that Cairo must utilize the funds to implement economic reforms.




Before IMF’s announcement of the loan to Egypt, the country’s central bank tabled a series of economic reforms. These reforms include hiking key interest rates by 2%, adopting a more flexible forex system, etc., to unwind external balances. The economic reforms aim to improve Egypt’s competitiveness and attract foreign investments. The lending rate now stands at 14.25%, the deposit rate at 13.25, and the discount rate at 13.75%.

Egypt’s economy was severely hit by the pandemic, while the subsequent outbreak of the Ukraine war in February was a double blow. Egypt, the world’s largest wheat importer, imported most of it from Russia and Ukraine. However, the ongoing war disrupted the market since the supply was subject to fluctuations in international prices.

FAQs

Who’s the IMF Chief for Egypt?
IMF’s Egypt Chief is Ivanna Vladkova Hollar.

What are the new interest rates in Egypt?
The lending rate now stands at 14.25%, the deposit rate at 13.25, and the discount rate at 13.75%.