Egypt may need to enact reforms more slowly than originally envisaged to avoid damaging its macroeconomic stability, the head of the International Monetary Fund said, amid preparations for a review of the country’s crucial $3 billion rescue package.
(Bloomberg) — Egypt may need to enact reforms more slowly than originally envisaged to avoid damaging its macroeconomic stability, the head of the International Monetary Fund said, amid preparations for a review of the country’s crucial $3 billion rescue package.
While the IMF and Egypt “agreed on a sound program” with pillars that include implementing a freer exchange rate and boosting the private sector, the planned speed of enactment “was originally designed under different circumstances,” Managing Director Kristalina Georgieva told reporters Thursday in Washington.
Following that initial plan “could undermine macroeconomic stability,” she said, without being more specific. “We have seen in Egypt a deeper understanding of how complex not only the domestic environment is, but also the regional and global environment.”
Russia’s invasion of Ukraine has hit the Egyptian economy particularly hard, triggering major food and fuel-price increases and cutting off sources of vital tourism revenues. The Middle East’s most populous country is also struggling with its worst foreign-currency crunch in years.
Authorities have devalued the pound three times since March 2022, helping secure the IMF deal but driving inflation to its highest in about five years. The North African nation has received billions of dollars in investment pledges from its energy-rich Gulf allies, but they have yet to pump in most of those funds as they await signs Egyptian authorities are making deep economic reforms.
The IMF said in January that the first review of the 46-month program was expected to be completed in March.
“We are now preparing to carry out the review,” Georgieva said. “The teams are working and I am confident that we will have a good outcome.”
–With assistance from Mirette Magdy.
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