Egypt has entered into an expanded loan agreement with the International Monetary Fund (IMF), announcing a $5 billion increase in its existing loan program. This development was revealed by the country’s prime minister on Wednesday, coinciding with significant actions by the central bank, including allowing the Egyptian pound to depreciate and adopting a policy of free currency trading.

The latest agreement builds upon the foundation of a $3 billion Extended Fund Facility established with the IMF in December 2022. Notably, this facility aimed to transition Egypt towards a more flexible exchange rate system. The IMF confirmed that consensus had been reached with Egypt on the necessary policies for the program’s delayed first and second reviews. Implementation of these policies could lead to the release of additional funding pending approval by the IMF’s executive board.

In a statement, the IMF outlined the objectives of the comprehensive policy package, emphasizing the preservation of debt sustainability, restoration of price stability, and the establishment of an effective exchange rate mechanism. Additionally, structural reforms aimed at fostering private sector-led growth and job creation are integral components of the agreement.

The policy package also encompasses a new framework to regulate infrastructure spending, particularly projects that have operated outside standard budget oversight. This initiative underscores Egypt’s commitment to fiscal discipline and effective utilization of resources for sustainable development.

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