Goldman Sachs Forecasts Egypt-IMF Financial Deal to Reach $12 Billion

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Goldman Sachs, a prominent American investment bank, has projected that Egypt is on the brink of finalizing a substantial $12 billion financing agreement with the International Monetary Fund (IMF), as reported by Asharq Bloomberg via their official account on X on Sunday.

According to the report, this financing package would encompass approximately $7 billion from the IMF and an additional $5 billion from external partners, reflecting a critical step in Egypt’s financial trajectory.

Goldman Sachs emphasized that the IMF has reached a preliminary consensus with Egypt on a new arrangement, which includes addressing the pending first and second reviews of the previous program.

Citing Egypt’s pressing financial obligations over the next four years, Goldman Sachs underscored the urgency for $8 billion to meet its existing liabilities and an additional $17 billion to stabilize the foreign exchange market and restore confidence in the Egyptian pound, amounting to a total of $25 billion.

The bank outlined Egypt’s potential to secure the remaining $13 billion through a combination of state asset sales, restructuring of future foreign currency dues, and the expected resurgence of remittances from overseas Egyptians to previous levels.

These assessments align with recent remarks by Kristalina Georgieva, the Managing Director of the IMF, who highlighted the advanced stage of negotiations between Egypt and the IMF during her recent visit to Egypt from 22 January to 1 February.

Georgieva acknowledged the multifaceted challenges facing Egypt, including economic fallout from the COVID-19 pandemic and geopolitical dynamics in regions like Ukraine, Sudan, and Gaza. She emphasized the IMF’s commitment to supporting Egypt during these challenging times for the sake of regional stability.

Egypt originally secured a four-year $3 billion Extended Fund Facility (EFF) loan program from the IMF in December 2022. However, delays in the program’s first and second reviews ensued due to ongoing global and regional tensions.

In a notable development, the Central Bank of Egypt (CBE) implemented a two percent (200 bps) increase in key interest rates on Thursday. This decision, seen as pivotal, could expedite efforts toward finalizing the IMF’s augmented rescue package and potentially pave the way for another devaluation of the Egyptian pound.

Egypt has undergone three currency devaluations since March 2022, resulting in a cumulative depreciation of approximately 70 percent against the US dollar. Currently, the official exchange rate stands at EGP 31 per dollar, as per the CBE’s data.