Egypt, IMF to assess impact of $8bn reform program on most vulnerable – BNN Bloomberg

(Bloomberg) — Egypt is putting together a wide-ranging survey to assess the impact of dramatic economic reforms on the Middle East’s largest population and work with the International Monetary Fund on how to protect the most vulnerable, the lender’s regional chief said.

The readiness of Egypt’s social protection programs is one of the issues planned to be discussed during the planned visit of IMF chief Kristalina Georgieva to Cairo in early November. The North African country has said it is seeking to review the goals and timing of its $8 billion IMF loan deal amid regional turmoil.

The new data is likely to show the impact of two years of currency devaluation and price increases on household spending, allowing the IMF and the government “to make sure that Egypt’s social programs can be made more effective,” Jihad Azour, IMF. director for the Middle East, North Africa and Central Asia, said in an interview in Washington.

Egypt, home to more than 106 million people, agreed an extended IMF loan deal in March as one of the cornerstones of a massive global bailout for an economy mired in a debilitating currency crisis since early 2022. Since then, the government has sharply cut subsidies for fuel, bread and electricity, putting even more pressure on beleaguered consumers.

On October 20, President Abdel-Fattah al-Sisi said the IMF deal was being negotiated in an “extremely difficult” regional and economic environment — citing Israel’s year-long conflicts with Hamas and Hezbollah — and a review would be necessary if financial changes made the pressure unbearable for ordinary Egyptians. .

The IMF has said it is ready to make changes to Egypt’s program, but says the loan amount is unlikely to change. The Washington lender is stressing the importance of supporting currency reform after authorities allowed the Egyptian pound to fall nearly 40% in March and said its value would reflect future supply and demand.

“We call on the authorities to maintain currency flexibility,” Azur said. The IMF team will “certainly assess the situation” during the latest review of Egypt’s program next month.

“We are also looking forward to increasing investment,” he said. At the same time, he added that “the high level of uncertainty in the region is not a favorable factor” for attracting foreign direct investment.

Egypt has pledged to sell more than two dozen assets as part of an IMF-backed initiative that will reduce the state’s significant role in the economy and attract important foreign money. The country hasn’t announced a major sell-off since the last devaluation.

Azur also said:

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