WASHINGTON: The International Monetary Fund stated on Thursday that Egypt’s $8 billion loan program remains “still appropriate” and highlighted the urgent need to evaluate the effectiveness of the country’s social protection initiatives.
During a recent address, Egyptian President Abdel Fattah El-Sisi warned that the nation might need to reconsider its expanded loan program if international institutions fail to acknowledge the extraordinary regional challenges Egypt is facing.
The support package, signed in March, mandates Egypt to cut subsidies on fuel, electricity, and other commodities while allowing its currency to float freely—steps that have ignited public discontent.
In a briefing, Jihad Azour, IMF Director for the Middle East and Central Asia, emphasized the need for collaboration with Egyptian authorities to enhance the reach and sufficiency of social protection programs. “This will be a priority issue for discussion with the managing director,” he noted.
Azour underscored the importance of maintaining currency exchange rate flexibility, a key condition of the loan agreement.
IMF Managing Director Kristalina Georgieva announced plans to visit Egypt in about 10 days to assess the country’s challenging economic landscape firsthand and reinforce the necessity of adhering to reform commitments.
She pointed out that Egypt continues to face repercussions from conflicts in Gaza, Lebanon, and Sudan, resulting in a 70 percent decline in Suez Canal revenues.
“We are open to adjusting the Egyptian program or any other program to best serve the people,” Georgieva said. “However, we cannot fulfill our responsibilities if we ignore necessary actions.”
BRICS payments system
Georgieva also commented on a proposed alternative cross-border payments system from the BRICS nations, indicating she requires more details to assess its potential impact but dismissed any immediate threat to the IMF.
Leaders from Brazil, Russia, India, China, and other BRICS nations recently pledged to enhance cooperation on cross-border payments, grain exchanges, and additional initiatives during a summit in Russia.
“The concept of a payment system among a group of countries is not new,” Georgieva stated. “What we need now is more specifics on how this idea may come to fruition before we can evaluate its implications. While various member states form different alliances, all members continue to support the IMF.”
