The International Monetary Fund (IMF) approved on Friday a three-year, $12 billion loan for Egypt to help the country recover from its deep economic crisis, the fund said in a statement.

The IMF board said it will release $2.75 billion to Egypt immediately, while further disbursements will depend on the country's economic performance and implementation of reforms. 

In mid-August Egypt reached a staff-level agreement with the IMF over the loan after endorsing 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 newly ratified value-added tax.

The reform program "will help Egypt restore macroeconomic stability and promote inclusive growth," the board said in a statement.

"Policies supported by the program aim to correct external imbalances and restore competitiveness, place the budget deficit and public debt on a declining path, boost growth and create jobs while protecting vulnerable groups."

The IMF loan will help to raise the country's foreign reserves to $23.5 billion, the state news agency MENA reported, citing the central bank's governor.

Egypt's net foreign reserves fell to $19.04 billion at the end of October.

The Washington-based fund's statement comes only a few days after its director Christine Lagarde said she would recommend that the request be approved "in support of this ambitious economic reform programme that will help restore macroeconomic stability and bring Egypt’s economy closer to its full potential."

Last week, the IMF welcomed Egypt's central bank decision to float the country's pound, saying that it would “boost competitiveness and attract foreign investment.”

Egypt relies heavily on imports and has been suffering from an acute foreign currency shortage since the 2011 revolution and the following unrest, which have spooked investors and tourists.