The Egyptian government and the International Monetary Fund (IMF) have agreed to enhance their financial collaboration, increasing Egypt's bailout loan to $8 billion from the initial $3 billion under the Extended Fund Facility established in December 2022. This expansion follows the Central Bank of Egypt's decision to adopt a free-floating exchange rate for the pound and to implement a significant interest rate hike of 600 basis points, aimed at stabilizing the nation's economy amidst pressures, including those from the war in Gaza.
Following these monetary policy adjustments, the Egyptian pound experienced a sharp devaluation against the dollar, exceeding a 60% loss in value, prompting the Central Bank to elevate the benchmark interest rate to 27.25% and the overnight lending rate to 28.25%.
Prime Minister Moustafa Madbouly highlighted that this augmented arrangement with the IMF not only supports the nation's financial stability but also enables Egypt to access additional loans from international financial institutions, including a $1.2 billion loan dedicated to environmental sustainability.
Source: aljazeera.com