IMF sees progress in Egypt talks, loan programme to ease Gaza pressures

Talks with Egypt to boost its IMF loan programme are making excellent progress and the country needs a comprehensive support package to deal with pressures posed by refugees from the war in Gaza, the International Monetary Fund (IMF) said on Thursday.

IMF spokesperson Julie Kozack told a regular news briefing that IMF staff and Egyptian authorities agreed on the main elements of programme changes under combined first and second reviews of Egypt's existing $3bn (R58.07bn) loan, and “authorities have expressed a strong commitment” to them.

She declined to discuss details of the Egypt package as the negotiations are continuing.

Regarding pressure on the talks posed by the issue of Gaza refugees, Kozack said: “There is a need to have a very comprehensive support package for Egypt and we're working very closely with both the Egyptian authorities and their partners to ensure that Egypt does not have any residual financing needs and also to ensure that the programme is able to ensure macroeconomic and financial stability in Egypt.”

The IMF in January cut its Middle East and North Africa GDP growth forecast for 2024 to 2.9%, down 0.5 percentage-point from October, because of the adverse economic impacts from the Israel-Hamas war. Egypt's 2024 growth outlook was cut 0.6 percentage point to 3.0%.

The IMF is continuing to monitor the economic impact of attacks on Suez Canal and Red Sea shipping, which is diverting trade flows away from the canal to around the Cape of Good Hope in SA, adding time and costs to Europe-Asia voyages, Kozack said.

The Fund's PortWatch data platform showed that Suez Canal shipping volumes in the seven days ending February 13 were down 55% from the same period a year earlier, while volumes around the Cape of Good Hope rose nearly 75%.

IMF MD Kristalina Georgieva said earlier this month that before the war, Egypt was collecting about $700m (R13.55bn) per month in Suez Canal transit fees and was now losing “hundreds of millions of dollars” per month because of attacks by Houthi militants on Red Sea shipping.

Reuters