Egypt's cabinet approved the International Monetary Fund (IMF) loan agreement in a meeting on Wednesday, referring it to the country's parliament, the state news agency MENA reported.
In mid-August 2016, Egypt reached a staff-level agreement with the IMF over a $12 billion loan to endorse the Arab nation's fiscal reform programme, which the government embarked on in 2014 in an attempt to curb the growing state budget deficit, estimated at 12.2 percent of GDP in 2015/16.
The programme includes cutting subsidies and the introduction of new taxes, such as the Value Added Tax.
Last November, the Central Bank of Egypt (CBE) said it received an initial $2.75 billion from the IMF following the IMF's board’s approval of the loan.
Article 127 of the Egyptian constitution stipulates that the executive power may not obtain a loan or funding or engage in a project that is not listed in the approved state budget which entails expenditure from the state treasury within the subsequent period, except with the approval of the House of Representatives.
On 3 November 2016, the CBE decided to freely float the pound and raise key interest rates as part of a set of reforms aimed at alleviating a dollar shortage and stabilising the country's flagging economy.