What should Egypt do to ensure steady FX inflows?

Egypt has signed an agreement with the International Monetary Fund (IMF) to increase its existing $3 billion deal to $8 billion. During a press conference, Prime Minister Mostafa Madbouly announced the signing of the agreement between Egypt and the IMF.

 

The IMF statement mentioned that the increase in the loan was prompted by "significant macroeconomic challenges" that have become more complex to manage due to the impact of the recent conflict in Gaza on tourism and Suez Canal receipts.

 

IMF Mission Chief, Ivanna Vladkova Hollar, stated that the Egyptian authorities have demonstrated a strong commitment to promptly address critical aspects of their economic reform program, with support from the IMF. The program reforms and policy discussions focused on six pillars.

 

“Ensuring a flexible exchange rate system is one of the IMF’s prerequisites for the loan, and this is what the Central Bank of Egypt is focusing on,” Economic Expert Karim Nassar stated in an interview with Egypt Today.

 

The six pillars of the IMF reform program include: moving towards a credible flexible exchange rate regime; tightening monetary policy to reduce inflation and reverse dollarization; fiscal consolidation to maintain debt sustainability; slowing down infrastructure spending; providing adequate social spending for vulnerable groups; and implementing reforms in state ownership policy to foster private sector growth.