March 30, 2024 (EIRNS)—On March 29, the Executive Board of the International Monetary Fund signed off on the first and second reviews of Egypt’s 46-month Extended Fund Facility agreement with Egypt. The program has been increased from $3 billion to $8 billion with the immediate release of $820 million.
“Macroeconomic conditions since the approval of the program have been challenging, with rising inflation, foreign exchange shortages and elevated debt levels and financing needs. The difficult external environment generated by Russia’s war in Ukraine was subsequently aggravated by the conflict in Gaza and Israel, as well as tensions in the Red Sea,” said the IMF.
The program comes with the usual “structural reforms” including flexible exchange rates, privatization of state-owned companies, tight credit policy, high interest rates, and tight fiscal policy. The program included the implementation of the newly established framework to monitor and control public investment, all of which, according to IMF Managing Director Kristalina Georgieva, is required for implementing the program.
Meanwhile the European Union earlier this week concluded a financial package of €7.4 billion which includes €5 billion as macro-financial assistance, which will be deposited in the Central Bank of Egypt. Of the remainder, €1.8 billion is part of an investment plan and €600 million in loans, including at least €200 million for “migration management.”
While the EU also cited the fact that the COVID 19 pandemic, the Ukraine war and the Gaza war have adversely affected Egypt, the EU seems especially worried about the effect of the war and specter of Palestinian refugees flooding Egypt and then to Europe. This is probably the reason why European Commission President Ursula von der Leyen announced on March 29 that she intends to fast-track €1 billion of the package by evoking a EU statute allowing the EU Commission to bypass the European Parliament and seek approval only from the Council of Ministers.
Egypt, which is a new BRICS member as of Jan. 1, 2024, has been carrying out an ambitious infrastructure drive, and development policies, including building new cities, industries and transportation projects. It is feared the new loan program is aimed at frustrating all this.
