International Monetary Fund spokeswoman Julie Kozak said in a press conference – today, Thursday – that the Fund is in talks with the Egyptian government regarding providing additional financing within the framework of the current program. She added, “The exact size of the funding is part of the discussions that the Fund’s representatives are conducting with the Egyptian authorities.”
The IMF considers increasing financing essential as the country faces economic difficulties as a result of the repercussions of the war launched by Israel on the Gaza Strip, “including the potential impact on tourism revenues.”
Egypt has a program with the International Monetary Fund to obtain $3 billion, which was agreed upon in December 2022.
Kozak explained that the talks will continue in the coming weeks to complete the first and second reviews of the extended financing facility program.
Serious effects
Last month, the Fund’s director, Kristalina Georgieva, said that the Fund was “seriously studying” a possible increase in the loan program for Egypt as a result of the difficulties resulting from the aggression on the Gaza Strip.
Georgieva added at the time that the conflict was “destroying” Gaza’s population and economy, and that it had “serious effects” on the economy of the West Bank, and also presented difficulties for the neighboring countries, Egypt, Lebanon and Jordan, through losses in tourism revenues and high energy costs.
She continued, “The impact of the war between Israel and Hamas on the global economy is very limited,” but she warned that this impact may increase in the event of a long-term conflict, as she put it. She also warned that Israel would witness an economic slowdown.
On the 6th of last month, Standard & Poor’s Global said that the war launched by Israel on Gaza has harmed tourism in the Middle East and North Africa region.
The agency added that the ongoing war has repercussions on other economies in the region, noting that the tourism sector will be the most affected in Lebanon, Egypt and Jordan, due to their geographical proximity and the possibility of expanding the scope of the conflict across their borders.
It was concluded that this would lead to a decline in the growth of real GDP in these countries and weaken their external positions.
Last year, tourism contributed 12% of current account revenues in Egypt.
The Egyptian Ministry of Tourism said that it was moving to support the tourism sector, which was greatly damaged by the ongoing aggression on Gaza, explaining that it was providing incentives to support tourism in South Sinai, where bookings fell to 10%.
Tourism is a major source of hard currency in Egypt, and it seems that it will not achieve the hoped-for number this year, which the Ministry of Tourism and Antiquities expressed more than two months ago, that Egypt targets 15 million tourists by the end of 2023, with expected revenues ranging between 16 and 17 billion dollars, during the fiscal year. The current 2023-2024 (which began on the first of last July) compared to 14 billion achieved during the last fiscal year.