IMF approves $3B loan to Egypt
Updated 12/18/2022 8:27:00 AM
ArabFinance: The executive board of the International Monetary Fund (IMF) approved a 46-month $3 billion loan to Egypt under the Extended Fund Facility (EFF), according to a press release on December 16th.
This decision enables an immediate release of special drawing rights (SDR) of 261.136 million (about $347 million) to Egypt to support its budget and help it meet payment needs.
The international financial institution stated that the EFF could help garner $14 billion in financing from Egypt’s international and regional partners, including GCC countries, through acquisitions of state-owned assets, and financings from multilateral and bilateral creditors.
The recent assistance package entails a series of economic measures to be taken, including a permanent shift to a flexible exchange rate to boost resilience against external shocks.
The measures also include designing a monetary policy that gradually reduces inflation and provides for fiscal consolidation and debt management to decrease the debt-to-GDP ratio and keep financing needs in check.
The IMF’s program also carries other structural reforms aiming to cut the state’s share in the economy and give a bigger role to the private sector.
Furthermore, Egypt requested access to the Resilience and Sustainability Facility (RSF), which could secure an additional SDR of 1 billion to support its climate-related goals.
“Russia’s war in Ukraine crystallized these pre-existing vulnerabilities, triggering capital outflows, and, in the context of a still-stabilized exchange rate, reduced the central bank’s foreign reserves and banks’ net foreign assets, and widened the exchange rate misalignment,” the Managing Director and Chairman of IMF, Kristalina Georgieva, commented.
“[Egypt’s] strong ownership and track record under previous fund-supported programs and political support for the policy package are important risk-mitigating factors to achieving the objectives of the fund-supported program,” she added.
In October, Egypt reached an agreement with the IMF over the four-year international financing program worth a total of $9 billion, including the $3 billion package from the IMF, along with $1 billion from the IMF's Resilience and Sustainability Trust (RST) and $5 billion from international partners.
