The Economic Pulse

Egypt is making significant strides in overcoming its economic challenges. The government's dedication to these reforms is evident in the ongoing review of Egypt's USD 8 billion loan program, which underscores the positive contributions of the Ras El Hekma sale proceeds and state ownership policies. This review is anticipated to conclude by June 15, paving the way for the release of the third tranche of USD 820 million.

Despite inflation slowing to 32.5% for two consecutive months, partly due to a 40% devaluation of the Egyptian pound, the IMF stresses strict monetary policies. The Central Bank of Egypt (CBE) delays interest rate cuts until after June's IMF review. The CBE's Monetary Policy Committee (MPC) keeps rates steady, citing exchange rate dynamics tightening monetary conditions, anchoring inflation expectations, and dampening inflation outlook.

The IMF delegation is scrutinizing how the government is using proceeds from the Ras El Hekma sale to meet new fiscal targets, including reducing public debt, capping government investments, and narrowing the budget deficit. Over the past decade, Egypt's external debt has quadrupled, reaching USD 165.4 billion at the end of the third quarter of 2023, and USD 168 billion in the first half of the current fiscal year. Some USD 11 billion of this debt is expected to be written off using funds from the Ras El Hekma agreement.