IMF paves way for $1.6 bil. disbursement to Egypt

Egypt's President Abdel Fattah El-Sisi attends a bilateral meeting with U.S. President on the sidelines of the G7 summit, in Evian, eastern France, June 17. AFP-Yonhap

The International Monetary Fund (IMF) has reached a staff-level agreement with Egyptian authorities on reviews of the country's loan program, clearing the way for the disbursement of $1.6 billion.

Egypt has multiple programs with the IMF, with a four-year $8.5 billion Extended Fund Facility that began in 2022 and a $1.3 billion Resilience and Sustainability Facility arrangement signed last year.

Heavily indebted Egypt is struggling with double-digit inflation as the effects of the U.S.-Israel war on Iran hit energy and other sectors, with the Egyptian currency depreciating as a result.

"The impact of the war in the Middle East on the Egyptian economy has remained relatively contained, supported by the authorities' timely and decisive policy actions," said Amine Mati, IMF mission chief for Egypt, in a statement on Monday.

Nevertheless, the Fund warned that downside risks were significant, with renewed global inflationary pressures and tightening financial conditions.

In April, the IMF slashed its Middle East and North Africa growth forecast to 1.1 percent due to the effects of the war on Iran.

The Fund is due to issue an update of its World Economic Outlook next week.

Mati highlighted Egyptian efforts to increase domestic revenue and strengthen public debt management, but warned that more needed to be done to place the country's economy on a sustainable path.

The agreement will now be considered by the IMF's board before disbursement can be made.