IMF spokesperson says board to consider more Egypt financing, asserting ‘no connection’ to developments in Gaza

Egypt could receive additional financing from the International Monetary Fund over the coming weeks, IMF Spokesperson Julie Kozack told journalists on Thursday evening.

Cairo is already receiving financing from the international lender under an agreement penned in 2022 that was augmented to a total of US$8 billion last year.

The IMF signalled at the time of the program increase that the additional funds were needed in light of the economic repercussions Israel’s war on Gaza has had on Egypt.  

Kozack said on Tuesday, however, that there was “no connection” between Egypt’s financing program and “some of the announcements in Gaza,” following a journalist’s question regarding whether the fund was considering the potential costs associated with the absorption of Palestinian refugees.

Officials in Egypt have spoken out over recent days to refuse the mass displacement of neighboring Gaza’s population amid repeated assertions from US President Donald Trump that Egypt will “take” Palestinians from the coastal enclave for an indefinite period of time.

Trump stated earlier this week that a lot of money could be mobilized to support his plan.

Cairo is already waiting for the transfer of $1.2 billion from the IMF under its existing program following the conclusion of its fourth program review in December.

Weathering global turbulence, a persistent balance of payments deficit and demanding external debt repayments, Egypt has turned to the fund for at least four financing programs since 2016.

Kozack stated on Thursday night that IMF executives set to consider the new financing program for Egypt in the coming weeks were also due to approve the results of the staff agreement reached for the Extended Fund Facility’s fourth review. 

Kozack said that the lender’s fourth review in Egypt, which took place in December, saw fund staff and  Egyptian authorities agree to “recalibrate the fiscal consolidation path to create fiscal space for critical social programs” for “vulnerable groups and the middle class” while ensuring debt sustainability. 

To do so, Kozack said, Egypt’s authorities and the IMF took into account “difficult external conditions and challenging domestic environment.”

Alongside the loans, the IMF has laid out programs of economic adjustments that have seen the government devalue the Egyptian pound and draw back subsidies on food and fuel, increasing the cost of living for over 100 million citizens and pushing many beneath the poverty line. 

To temper the impact of subsidy cuts on a general public already facing soaring living costs, the government has frequently delayed planned policy changes such as liberalizing the cost of fuel.

Kozack said that at the same time the executive board would be considering a new potential financing stream for Egypt under the Resilience and Sustainability Facility.

The new financing would come alongside a package of policy reforms, she continued, declining to comment on the amount that would be made available to Cairo under the new program.

RSF financing, which Egyptian authorities requested alongside the 2022 loan program, is capped at around SDR 1 billion, or the equivalent of around $1.3 billion.

Officials have cited the impact Israel’s war on Gaza has had on foreign revenues which the government normally reaps from international trade via the Suez Canal, which declined by over 24 percent year-on-year in fiscal year 2023/24. 

Egypt’s politicians have also pointed to the economic impact of absorbing refugees from other neighboring countries. 

The IMF’s agreement to augment the 2022 program from $3 billion to $8 billion early last year was the beginning of a bailout that ultimately saw Egypt receive commitments of over $40 billion in financing and investments from the United Arab Emirates and Europe. 

This report was edited for Mada Masr by Emma Scolding.