The IMF has approved a $1.2 billion disbursement to Egypt and an additional $1.3 billion request under the RSF after the fourth review of Egypt’s economic reform program. Egypt reported a significant decrease in inflation due to financial reforms, and with support from foreign investors, there is a positive outlook for the country’s treasury bonds amidst ongoing economic challenges.
The International Monetary Fund (IMF) has sanctioned the release of $1.2 billion to Egypt following the completion of the fourth review of the country’s $8 billion economic reform program. Additionally, the IMF’s executive board endorsed Egypt’s request for access to approximately $1.3 billion under the Resilience and Sustainability Facility (RSF). Egypt has sought financing under the RSF since 2022, which is anticipated to facilitate the unlocking of up to an additional $1 billion in funding.
Recent reports indicate a significant improvement in Egypt’s economic indicators, as headline inflation nearly halved in February due to financial reforms associated with the IMF support agreement. Annual urban consumer price inflation fell to 12.8% in February, down from 24.0% in January, while core inflation dropped more than anticipated to 10% year-on-year in February from 22.6% in January.
Experts predict that, supported by the IMF agreement and substantial investments from the UAE, foreign investors will largely maintain their holdings in Egyptian treasury bonds. Egypt has been facing challenges, including soaring inflation and foreign currency shortages. Moreover, a notable decline in Suez Canal revenue, exacerbated by regional tensions over the past year, has added to the country’s economic difficulties. With the expanded IMF program agreed upon in March 2024, there are hopes for stabilization and recovery in Egypt’s economic landscape.
In summary, the IMF’s endorsement for Egypt to access $1.2 billion signals confidence in the country’s economic reforms amidst ongoing challenges. The decline in inflation rates is a positive outcome of these reforms, supporting financing efforts critical for economic recovery. The anticipated inertia of foreign investors in the treasury bond market reflects a cautious optimism for Egypt’s fiscal future following recent reforms and external investments.
Original Source: www.tradingview.com
