Cairo: The International Monetary Fund (IMF) has highlighted the significant negative impact of the ongoing Gaza conflict and trade disruptions in the Red Sea on Egypt’s economy. The war in Gaza and these disruptions have led to a substantial decline of up to 70 percent in Suez Canal receipts, a vital source of foreign currency for the country.
According to Kuwait News Agency, the IMF issued a statement following the conclusion of its mission’s visit to Egypt, which spanned from November 6 to November 20. The statement emphasized the challenging economic outlook for the region amidst multiple geopolitical tensions, including the situation in Egypt.
The IMF noted that the growing number of refugees in Egypt is exerting fiscal pressure on public services, particularly in health and education sectors. Despite these challenges, Egyptian authorities have implemented key reforms to maintain macroeconomic stability. The unification of the exchange rate since March has helped eliminate the backlog of foreign ex
change demand and eased import processes.
The IMF’s mission and Egyptian authorities have made significant progress in discussions towards completing the fourth review under the Extended Fund Facility (EFF). The discussions included medium-term challenges and opportunities, as well as potential additional reform measures related to climate change.
The statement also pointed out that tax policy reforms are crucial for Egypt’s domestic revenue mobilization efforts. These reforms aim to generate adequate fiscal space to finance essential expenditure programs, particularly in health, education, and social safety nets, while also reducing debt and debt service.
Furthermore, the IMF underlined the importance of private sector development as the main driver of future growth. It emphasized that fostering private sector growth is essential for ensuring macroeconomic stability, creating job opportunities, and unlocking Egypt’s economic potential for the benefit of all Egyptians.
Discussions between the IMF
and Egyptian authorities are expected to continue in the coming days to finalize agreements on the remaining policies and reforms needed to support the fourth review.