Exclusive-IMF's Georgieva sees completion of Egypt loan reviews in 'weeks'

IMF Managing Director Kristalina Georgieva speaks during an interview on the day she attends G20 Financial Summit, in Sao Paulo, Brazil, February 27, 2024. REUTERS/Carla Carniel

By Andrea Shalal

SAO PAULO (Reuters) – The International Monetary Fund has resolved key issues with Egyptian authorities in a review of its $3 billion loan program and should finalize an augmented financing package within weeks, IMF Managing Director Kristalina Georgieva told Reuters on Tuesday.

IMF Managing Director Kristalina Georgieva speaks during an interview on the day she attends G20 Financial Summit, in Sao Paulo, Brazil, February 27, 2024. REUTERS/Carla Carniel

Georgieva, in an interview on the sidelines of a G20 finance meeting in Brazil, declined to say how big a loan increase Egypt could expect and details were still being finalized. She said the engagement had been “very constructive” and there were “very encouraging signals” about Egypt’s views on dealing with heritage issues that had affected its competitiveness.

IMF Managing Director Kristalina Georgieva speaks during an interview on the day she attends G20 Financial Summit, in Sao Paulo, Brazil, February 27, 2024. REUTERS/Carla Carniel

Asked about media reports that the IMF could boost the size of Egypt’s $3 billion loan to as much as $12 billion, Georgieva said, “You know, there is nothing wrong in thinking big.”

“The likelihood of us augmenting the program, of course, is right there,” she told Reuters in an interview on the sidelines of a meeting of Group of 20 finance officials in Sao Paulo, citing additional challenges posed to Egypt by Israel’s war in Gaza and shipping disruptions in the Red Sea.

“Conditions have deteriorated not by the fault of Egypt, (but) because of an exogenous shock,” she said.

The IMF in January cut its Middle East and North Africa GDP growth forecast for 2024 to 2.9%, down 0.5 percentage-point from October, because of impacts from the Israel-Gaza war. Egypt’s 2024 growth outlook was cut 0.6 percentage point to 3.0%.

IMF Managing Director Kristalina Georgieva speaks during an interview on the day she attends G20 Financial Summit, in Sao Paulo, Brazil, February 27, 2024. REUTERS/Carla Carniel

Georgieva noted that traffic in the Suez Canal, which previously generated $700 million per month in revenue for Egypt, was down by 55-60%, tourism was down, and Egypt had already been dealing with an influx of refugees from Somalia and Sudan.

“The stability of Egypt matters to Egypt, but it matters to the whole Middle East,” she said.

Egypt’s announcement on Friday of a $35 billion investment by the United Arab Emirates to develop a prime stretch of its Mediterranean coast was a “a very positive sign,” she said.

IMF Managing Director Kristalina Georgieva speaks during an interview on the day she attends G20 Financial Summit, in Sao Paulo, Brazil, February 27, 2024. REUTERS/Carla Carniel

The IMF would also factor in inflows of funding from other sources to close Egypt’s financing gap, she said.

Georgieva said she had expected the program reviews to be completed by now, but the IMF wanted to give the Egyptian authorities the space to “have the confidence that all the elements of support are there.”

“Now there was the hope to complete the reviews by the time the Muslim fasting month of Ramadan begins,” she said. “Let’s see where we land. But I do expect that in weeks we will have completion. I can say with confidence now, on the key issues we have full agreement.”

(Reporting by Andrea Shalal; Editing by Alistair Bell)