Egypt Secures $8 Billion Bailout Deal with IMF, Prime Minister Announces

Egypt announced on Wednesday that it has finalized a deal with the International Monetary Fund (IMF) to increase its bailout loan to $8 billion. Prime Minister Moustafa Madbouly made the announcement during televised remarks. The agreement comes after months of negotiations between Egypt and the IMF to enhance the existing $3 billion bailout loan established in 2022.

Madbouly stated that the new deal will allow the government to access loans from other financial institutions, including the World Bank. This development follows Egypt’s Central Bank decision to raise its main interest rate and float the currency, both of which were key demands from the IMF.

The measures are aimed at addressing inflationary pressures and attracting foreign investment amidst a significant shortage of foreign currency in Egypt. Following the currency floatation, the Egyptian pound depreciated rapidly, losing more than 60% of its value against the US dollar within hours.

Additionally, the Central Bank raised the key interest rate by 600 basis points to 27.75%, while the overnight deposit and lending rates were also increased by 600 basis points each. These actions reflect efforts to stabilize the economy in the face of challenges such as government austerity, the COVID-19 pandemic, and geopolitical conflicts including the war in Ukraine and the Israel-Hamas conflict in Gaza.

Egypt, being the world’s largest importer of wheat, faces heightened financial vulnerability due to its reliance on food imports to sustain its population of over 104 million people.

Quest: Cris-Edesiri Odjomah

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