File Photo: International Monetary Fund (IMF) logo (Photo: Reuters)
The International Monetary Fund (IMF) has given the green light to disburse the final $2 billion tranche to Egypt, completing a $12 billion loan package.
“Egypt has successfully completed the three-year arrangement under the Extended Fund Facility and achieved its main objectives," David Lipton, Acting Managing Director and Chairman of the Board, said.
"The macroeconomic situation has improved markedly since 2016, supported by the authorities’ strong ownership of their reform program and decisive upfront policy actions. Critical macroeconomic reforms have been successful in correcting large external and domestic imbalances, achieving macroeconomic stabilization and a recovery in growth and employment, and putting public debt on a clearly declining trajectory."
The decision comes a few weeks after Egypt implemented a fresh round of fuel subsidy cuts, which raised domestic prices between 16 to 30 percent, bringing them in line with their real cost.
Egypt first reached a staff-level agreement with the IMF in August 2016 over the loan after the IMF endorsed 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 the GDP in 2015/16.
Last month, Egypt said that it is in talks with the IMF for a non-loan programme, and hopes to reach an agreement by October.
Egypt is set to begin repaying the loan in tranches after five years of receiving the first tranche of the $2.75 billion in November 2016, shortly after it floated its currency in an unprecedented move.
Relying heavily on imports, Egypt suffered from an acute foreign currency shortage following the 2011 revolution and the ensuing unrest, which spooked investors and tourists before its economcy started to recover.
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