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- The International Monetary Fund (IMF) will rescue Egypt to come out of the deep economic crisis caused by the Russian -Ukraine war. The bailout is taking place at the request of the Egyptian authorities to support its comprehensive economic programme.
The International Monetary Fund (IMF) will rescue Egypt to come out of the deep economic crisis caused by the Russian -Ukraine war. The bailout is taking place at the request of the Egyptian authorities to support its comprehensive economic programme. The main reason for the bailout package is increase in commodity prices- wheat and sunflower oil- which the north African country imports from Russia in high volumes.
The inflation rate in Egypt has reached 10% year-on-year in February, riding on the back of a 20% rise in food prices. Inflation has been creeping up in Egypt since the launch of an IMF-led reform programme in November 2016. The IMF loan of nearly 11 billion euros in exchange for drastic austerity measures followed by the devaluation of the local currency kept the prices of essential goods very high.
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The IMF also approved a US$5.4 billion aid package in 2020 to help the country to cope up with the pandemic. Since then, Egypt has been implementing several reform measures including slashing subsidies, a common stipulation insisted by the multilateral lender. Egypt has been receiving liberal loans and packages from both World Bank and the IMF to tide over its economic ills.
