IMF ties Egypt loan disbursements to floating exchange rate

The IMF will link payments to Egypt as part of an $8 billion financial programme to the country’s continued commitment to a market-based currency system and making foreign exchange available to businesses and individuals, the multilateral lender said Monday.

The loan aims to bolster Egypt's ailing economy, hit hard by the Gaza crisis. The conflict stifled tourism growth and exposed Red Sea shipping to attacks from Yemen, halving Suez Canal revenue. Tourism and canal fees are crucial sources of foreign currency for Egypt.

The agreement includes scheduled reviews every six months, with each unlocking $1.3 billion upon meeting specific conditions. The final payment is expected in fall 2026. This program expands on a $3 billion loan signed in December 2022.

While Egypt initially allowed its currency to depreciate after that agreement, it quickly re-pegged it to the dollar, prompting the IMF to halt the program. Under the new agreement, Egypt has once again devalued its currency and is allowing it to fluctuate freely.