(Bloomberg) -- The head of the International Monetary Fund will visit Egypt soon for talks after the government said the impact from regional conflicts may require a review of the targets and timetables of its $8 billion deal.
“We have been very open to adjust the Egyptian program or any other program to what is best to serve the people,” Managing Director Kristalina Georgieva told reporters in Washington on Thursday. She’ll visit in about 10 days, she said at the IMF and World Bank’s annual meetings.
“Unprecedented” events across the Middle East are posing challenges for Egypt, Prime Minister Mostafa Madbouly said the day before, singling out a decline in Suez Canal revenue caused by maritime attacks by the Yemen-based Houthi militants in the Red Sea.
Egypt’s sovereign dollar bonds maintained their gains after Georgieva’s comments, with the 2048 note posting its first advance in six days.
The IMF deal, which was expanded from $3 billion earlier this year, has a key backstop for Egypt’s finances, albeit one dwarfed by a $35 billion investment injection by the United Arab Emirates.
On Sunday, President Abdel-Fattah El-Sisi said the IMF deal is being implemented under “extremely difficult regional, international and global circumstances” and a review of its goals may be needed if economic pressures place an extreme burden on Egypt’s 106 million-plus population.
The North African nation’s government has cut subsidies on fuel, electricity and bread in recent months as part of pledges to trim spending. That’s caused inflation, which had been falling from last year’s record high, to accelerate anew for the past two months.
Still, Georgieva said Egypt would have to continue reforming its economy, which was mired in about two years of crisis until the IMF program was increased in March, shortly after the UAE announced its megainvestment.
“Egypt is better served by undertaking reforms sooner rather than later,” she said. “We are not going to do our job for the country and for the people of the country if we pretend that action that needs to be taken can be forgone.”
--With assistance from Srinivasan Sivabalan.
(Updates with market reaction in fourth paragraph.)
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