IMF vows to support Egypt as nation braces for mass displacement of Gazans
Cairo is putting the finishing touches on a 'buffer zone' in the eastern Sinai Desert that many expect will serve as a makeshift shelter for more than one million Palestinians once Israel's ground invasion of Rafah begins
The International Monetary Fund (IMF) says there is “excellent progress” in talks with Egypt over a loan program that seeks to “support” the country in weathering its financial woes and handling a potential deluge of Palestinian refugees that Israel seeks to ethnically cleanse from Gaza.
“The IMF team and the Egyptian authorities have agreed on the main elements of a program, and the authorities have expressed a strong commitment to it. These discussions are ongoing, so I will not get into the details of the discussions, but we certainly will update you once the discussions are finalized,” IMF spokesperson Julie Kozack told reporters on 22 February.
"With respect to the question on the potential impact pressures from refugees from Gaza, what we do see in Egypt is that there is a need to have a very comprehensive support package for Egypt. And we're working … to ensure that Egypt does not have any residual financing needs and also to ensure that the program is able to, you know, ensure macroeconomic and financial stability in Egypt," Kozack added.
Egypt has been in talks for the last month with the US-based financial agency to revive and expand a $3 billion loan agreement signed in December 2022.
Disbursements on the loan were put on hold last year after Egypt did not follow through on a pledge to let the Egyptian pound “respond to market forces” and instead fixed it against the US dollar in March.
However, Cairo's fortunes with the IMF took a turn following the start of Israel's genocide campaign in the Gaza Strip.
IMF Managing Director Kristalina Georgieva said in November that the agency was “seriously considering” a possible augmentation of Egypt’s loan program due to “economic difficulties posed by the Israel-Gaza war.”
"The loan could reach up to US$10 billion to help the Egyptian economy survive amid local and external factors, including the Israeli onslaught on the neighboring Gaza Strip and tensions in the Red Sea negatively influencing the revenues generated by the Suez Canal," an official Egyptian source told The New Arab earlier this month.
Furthermore, this week, US multinational energy firm Chevron announced plans to expand production at Israel's Tamar field in a move that will increase gas exports to Egypt by an additional 4 billion cubic meters in the coming years.
This coincided with the start of construction work on an “isolated security zone” in the eastern Sinai Desert on the border with the Gaza Strip, which many expect will serve as a buffer zone for displaced Palestinians.
“The construction work seen in Sinai along the border with Gaza – the establishment of a reinforced security perimeter around a specific, open area of land – are serious signs that Egypt may be preparing to accept and allow the displacement of Gazans to Sinai, in coordination with Israel and the United States,” Muhannad Sabry, a researcher in Sinai affairs and security in Egypt, told the Sinai Foundation last week.
Cairo recently boosted its military presence on the Gaza border, citing fears of a spillover of Israel's ethnic cleansing campaign onto its territory once the ground invasion of Rafah begins. Israeli officials have repeatedly made clear their desire not only to “defeat Hamas” but also to force Gaza's 2.3 million citizens to flee to Egypt or other countries as refugees.