It is a minimum plan that the International Monetary Fund (IMF) has approved for Egypt. Friday, December 16, the board of directors of the financial institution gave the green light to a loan of 3 billion dollars (2.83 billion euros) over forty-six months, which should give the country a breath of fresh air. to face the economic crisis into which the war in Ukraine has plunged since February 24 and to try to restore the confidence of foreign investors who have turned away from this emerging market of 104 million inhabitants.
A tranche of $347 million will be disbursed immediately. This loan, and the additional funding expected from multilateral organisations, will however be insufficient to get the country, one of the most indebted in the Middle East, out of a much more structural crisis. This is also the third that Cairo has contracted since 2016, the year when the country plunged into an unprecedented crisis following the upheavals of the “Arab Spring”.
With the loans granted to absorb the effects of the Covid-19 pandemic, Egypt has in total obtained from the IMF nearly 23 billion dollars in seven years, which makes it the second largest debtor of the institution, after Argentina. The new borrowing is expected to bring about $14 billion in additional financing from Egypt’s international and regional partners, the IMF said, including new financing from Gulf countries and other countries. “through the ongoing divestment of public assets as well as traditional forms of financing from multilateral and bilateral creditors”the lender said.
Debt refund
The IMF estimates that Egypt’s external financing gap will be $16 billion over the life of the program, Finance Minister Mohamed Maait said in November. “Egypt is in a difficult situation, underlines Timothy Kaldas, researcher at the Tahrir Institute for Middle East Policy. It will have to seriously consider implementing more substantial structural reforms in order to have a chance of obtaining the type of financing it needs. In the meantime, the quality of life of Egyptians will continue to deteriorate, which is worrying. »
The surge in oil and commodity prices following the war in Ukraine has hit the country, the world’s largest wheat importer, hard. Gulf sponsors had to come to its rescue, with deposits and promises of investment, after the outflow of more than $22 billion in foreign capital. A major part of State revenue is devoted to debt repayment. The IMF set in Cairo the target of reducing the ratio of public debt to gross domestic product (GDP) from 89.5% to 70.4% by 2027.
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