Egypt said to have agreed 8bn USD IMF loan conditions
Egypt announces an $8 billion bailout agreement with the IMF to tackle the country’s soaring inflation, according to The Associated Press.
The Egyptian pound’s value currently lies at the mercy of the supply and demand from other countries as Egypt floated its currency on 6th March, in the interest of attracting foreign investment and reducing inflation.
Reuters reported that Egypt is also pursuing a separate loan from the IMF’s Resilience and Sustainability Facility that promotes climate transition financing.
Following the Central Bank of Egypt’s announcement to increase the already established $3 billion IMF loan by $5 billion, the Egyptian pound’s value rapidly declined within hours and lost more than 60% of its value against the US dollar.
Commercial banks traded $1 for more than 50 Egyptian pounds the day the announcement was made, a 62% increase from the already critical exchange rate of 31 pounds per dollar.
Egypt’s President, Abdel Fattah al-Sisi declared the country’s economic instability in late January when the Egyptian pound was valued at 30.9 to 1 USD.
President al-Sisi commended Egypt’s citizens for their resilience to the country’s economic hardships. However, government austerity combined with Egypt’s high food prices, Houthi attacks on Red Sea shipping routes (that disrupted a major source of foreign currency) and the fallout from two major international wars have all contributed to Egypt’s crumbling economy.
READ: What does Sisi’s re-election mean for Egypt?
Egypt is the world’s biggest importer of wheat as its population of over 104 million makes it the most populated Arab country. The highly arid country needs to import most of the food its citizens consume due to the lack of rainfall it receives. However, Egypt’s heavily relied upon wheat imports fell by 18.7% in 2022 due to Russia’s invasion of Ukraine.
Despite Russia’s hand in Egypt’s national inflation and socio-economic hardship, relations between the two remain strong as in late January Egypt signed an agreement with Russia permitting the construction of a nuclear power unit at the Dabaa plant.
AP/Reuters
