IMF approves extended funding facility

The IMF on Friday completed the first and second reviews of Egypt’s Extended Fund Facility (EFF) arrangement and approved an augmentation of the original programme by $5bn. Al Jazeera reports that the arrangement comes two weeks after Egypt announced a deal with the UAE sovereign wealth fund ADQ that it said would deliver $35bn in investments by late April. The IMF said the Egyptian authorities were permitted to immediately draw $820m. The 46-month EFF arrangement was approved on 16 December 2022. In completing the review, the IMF assessed that all but one of the quantitative performance targets for end-June 2023 were met. It approved the request for a waiver for non-observance of the June performance criterion on Net International Reserves on the basis of corrective actions. Macroeconomic conditions since the approval of the programme have been challenging, with rising inflation, foreign exchange shortages and elevated debt levels and financing needs. The difficult external environment generated by Russia’s war in Ukraine was subsequently aggravated by the conflict in Gaza and Israel, as well as tensions in the Red Sea. ‘These developments increased the complexity of macroeconomic challenges and called for decisive domestic policy action supported by a more robust external financing package, including from the IMF,’ the statement explained.