Kristalina Georgieva, the managing director of the IMF, said that in the light of the sequence increases in the prices of food and power globally, she feels concerned about the results of that on the people of Egypt. She indicated that the IMF is already engaged in discussions with the Egyptian government to assist in the protection of the most vulnerable groups in the society, and how to target the most affected categories including individuals or the most vulnerable companies in order to mitigate the effects of the Russian-Ukrainian War on the Egyptian economy.
Last January, reports revealed that Egypt has communicated with the IMF and engaged in discussion before months about the possibility of securing a new loan that was confirmed by governmental and diplomat sources. A few days ago, a memo issued by JPMorgan Chase revealed that there is a reasonable prospect that Egypt may seek the IMF to finance the balance of payments if the degradation of the Egyptian debt market continued. Last December, Fitch Ratings for of credit rating agency stated that Egypt would need a new program with the IMF in case of liquidity crises occurred.
It should be mentioned that Egypt received two loans from the IMF over the past six years. The first came in 2016 for USD12 billion through the IMF’s Extended Fund Facility (EFF) to support the economic reform program which coincides with the flotation of the pound. The primary benefits of the program are the amount of the loan and the length of the repayment period, which may extend out to 10 years, and that it is not restricted to certain projects but instead can go into the general budget.
After the outbreak of the Corona crisis in 2020, Egypt received another loan worth USD 8 billion divided into two instalments; the first is USD 5.2 billion through the Stand-By Arrangement (SBA) which is a short-term loan, as the repayment period is no longer than 5 years. And the second is worth USD 2.772 billion through The Rapid Financing Instrument (RFI) which is granted in extraordinary times.