Egypt has inked a deal with the International Monetary Fund (IMF) to expand an initial $3 billion loan package to $8 billion, as confirmed by Egyptian Prime Minister Mostafa Madbouly and the IMF’s mission chief for Egypt, Ivanna Vladkova Hollar, on Wednesday.
The agreement was reached shortly after Egypt’s central bank raised interest rates and announced the floatation of the pound.
Following these developments, the Egyptian pound plummeted to a record low of around 50 pounds to the US dollar by the close of markets on Wednesday. This decline marks a stark contrast to over a year of maintaining a stable official exchange rate of approximately 30.9 against the dollar.
Hollar commended Egypt’s actions as “decisive steps towards transitioning to a flexible exchange rate system,” emphasizing the unification of exchange rates between the official and parallel markets.
She expressed optimism that this move would alleviate foreign currency shortages, which have plagued Egypt for months, leading to a surge in the parallel market rate and concerns over the country’s ability to service its substantial foreign debt.
