The International Monetary Fund (IMF) announced on Tuesday that it had completed its fourth review of Egypt’s ongoing economic reform program, approving a $1.2 billion disbursement to support the country’s efforts to stabilize its economy. The IMF’s executive board also granted Egypt’s request for an arrangement under the Resilience and Sustainability Facility, granting access to an additional $1.3 billion.
The approval comes after a detailed assessment of Egypt’s economic performance, which includes progress in implementing a series of fiscal reforms aimed at addressing the country’s economic challenges. The $1.2 billion will be disbursed immediately, providing crucial financial support to Egypt as it navigates a turbulent economic landscape.
The Egyptian economy has been grappling with significant challenges, including soaring inflation, rising living costs, and a dramatic devaluation of the Egyptian pound against foreign currencies. These economic pressures have been exacerbated by the global rise in commodity prices and the government’s policy measures aimed at curbing fiscal deficits.
Among the most pressing issues facing Egyptians are rising fuel prices, increased public transport costs, and a significant drop in the value of the Egyptian pound. The devaluation of the currency has made imports more expensive, contributing to inflation and the escalating cost of basic goods and services. In response to these challenges, the government has made efforts to cushion the impact on citizens, including raising the minimum monthly wage for public sector workers.
In a bid to provide some relief to the public, Finance Minister Ahmed Kouchouk announced in March that the minimum wage for public sector workers would rise to EGP 7,000 ($138) starting in July, up from EGP 6,000 ($118.58). This wage increase is in line with the hike already implemented in the private sector earlier this year. The wage boost is part of the government’s broader social protection initiative, aimed at improving the standard of living amid economic hardship.
The price of fuel has been a significant driver of inflation, with Egypt raising fuel prices by 10% to 17% in October. The price hike affected both gasoline and diesel, which are vital for transportation and the economy. For example, the cost of a liter of diesel increased from 11.5 pounds ($0.23) to 13.5 pounds ($0.25), while 92-octane gasoline prices rose from 13.75 pounds ($0.28) to 15.25 pounds ($0.31).
These price hikes and policy measures are part of Egypt’s agreement with the IMF, which it reached last spring as part of a broader deal to secure a financial bailout. As part of the agreement, Egypt’s bailout package was increased to $8 billion, a key step in stabilizing the country’s finances and meeting the IMF’s conditions for continued assistance.
Despite the economic strain, Egypt is expected to continue its reform program in hopes of achieving long-term economic stability. The IMF’s approval of the additional funds is seen as a sign of confidence in Egypt’s ability to implement necessary reforms, though many challenges remain as the country works to restore fiscal balance and reduce the impact of inflation on everyday citizens.
