Amid Crisis, Egypt to receive first $1.5bn of IMF loan

By Al Mayadeen English
Source: News Websites
13 Mar 2024 00:04

The IMF has granted Egypt $8 billion in loans to help the country adapt to the ramifications the Israeli genocide in Gaza has had on Egypt.

An Egyptian walks past an exchange office in Cairo, Egypt, Wednesday, March 6, 2024 (AP)

Egypt is receiving $1.5 billion next week in an initial batch of the $8 billion loan the International Monetary Fund (IMF) has granted it, sources cited by Egyptian newspaper Al Mal reported.

This comes after the IMF agreed to increase Egypt's loan program, initially set at $3 billion, to $8 billion due to the changing "macroeconomic conditions" the country is seeing, referring to the Israeli genocide in Gaza that has negatively impacted tourism to Egypt, as well as profits from the Suez Canal.

Egyptian media reported that the country has only received 350 million dollars from the initial package, which was brokered in December 2022 and would be validated for over 46 months.

Egypt's Suez Canal revenues plunge by 46% in January 2024

The chairman of Egypt's Suez Canal Authority on Saturday reported that revenues for the month of January 2024 witnessed a massive decrease of 46% compared to the same period in 2023.

"In January of last year, we saw revenues of $804 million, versus $428 million this year, which means a loss of 46%," Admiral Osama Rabiee told the Egyptian-based broadcaster ON.

The quantity of vessels traversing the crucial waterway, linking the Red Sea to the Mediterranean, experienced a 36% decline last month compared to January 2023.

This comes at a time when US-instigated escalations in the Red Sea have dramatically altered global shipping dynamics.

Egyptian Pound in disastrous lows after Bank agrees to IMF conditions

Reuters reported last week that the Egyptian pound hit a record low against the greenback after the central bank announced that it would let the pound trade freely and induced a significant hike in interest rates by 600 basis points.

These measures to "stabilize" the economy are said to be taken with the "help" from Gulf investment and the IMF funds.

For months, Egyptian authorities had attempted to defend a specific exchange rate level, namely 30.85 pounds to the dollar. But this morning saw the currency weaken to 50 pounds.

The IMF had imposed a more flexible exchange rate as a precondition for a deal in the making, which involves expanding the agency's current $3 billion support program with Egypt.

Analysts widely welcomed these measures, Reuters says, adding that they facilitated the agreement with the fund.