Egypt to discuss re-evaluating terms of IMF loan agreement during November review

El Sisi highlighted regional conflicts and reduced national revenues as circumstances that IMF must appreciate

Fruit and vegetables on sale at a market in Cairo. Egypt's annual urban inflation rate has increased to 26.4 per cent in September, up from 26.2 per cent in August. EPA-EFE

Egyptian Prime Minister Mostafa Madbouly said on Wednesday that the government is working on President Abdel Fattah El Sisi's directives to review the country's IMF programme targets and timelines “if people cannot bear it”.

Mr Madbouly’s comments, made during a speech following the weekly Cabinet meeting, followed statements made by Mr El Sisi on Sunday, when he said that regional conflicts could “force” Egypt to re-evaluate its programme with the fund.

The programme, worth $8 billion, was finalised in March and has required a freefloat of the currency and significant reductions in subsidies on food, fuel and public services that have been met with anger from millions of Egyptians.

On Friday, the government raised prices on a wide range of fuel products for the third time this year. Diesel and gasoline prices rose by between 11 per cent and 17 per cent.

This follows a subsidy cut on bread in June which raised the price of loaves by more than 300 per cent.

Mr Madbouly and IMF officials have said that the plan is for an end to fuel subsidies by December 2025.

The fund said in an August report on Egypt's programme that it would leave the reductions of fuel subsidies up to the government provided they were at market levels by the end of next year.

Egypt's annual urban inflation rate increased to 26.4 per cent in September, up from 26.2 per cent in August, driven by rising electricity, fuel and food costs following subsidy cuts. The Egyptian government raised electricity prices by up to 50 per cent in September.

Mr Madbouly said that several ministers are participating in the annual meetings of the IMF and the World Bank in Washington, and that an IMF mission will visit Egypt soon after for its fourth review.

“We will have the opportunity during this review to implement the president's directives to review the programme's timelines and targets,” Mr Madbouly said.

The next review will take place in November, according to statements this month by Rania Al Mashat, Egypt's Minister of Planning, Economic Development, and International Co-operation, who also serves as a regional consultant for the IMF.

Mr El Sisi warned during his speech on Sunday that Israel’s war in Gaza, which now has another front in Lebanon, has cut Egypt’s national revenue by between $5 billion and $6 billion over the past seven to 10 months. This has put an excessive strain on the country’s economy, he said.

Attacks on Red Sea shipping by Yemen's Houthi rebels, acting in solidarity with Palestinians in Gaza, have diverted traffic from the Suez Canal, causing revenue to fall to $870 million in the second quarter from $2.54 billion a year earlier.

The Suez Canal is one of Egypt’s most important sources of foreign currency, which has been in shortage over the past two years to the detriment of Egyptian industry.

According to the IMF’s World Economic Outlook report released on Tuesday, October 22, Egypt's GDP growth is expected to reach 4.1 per cent in the 2025-2026 fiscal year, up from a forecast 2.7 per cent in the current fiscal year.

A successful review in November would unlock $1.3 billion in funding, the largest instalment to date, as part of the programme's fourth tranche.

The fund has not yet commented on Egypt’s intention to review the terms of its loan programme.