Egypt reaches staff-level agreement with IMF over $5.2 billion standby loan

Doaa A.Moneim , Friday 5 Jun 2020


Egypt moved a step closer to receiving a $5.2 billion standby loan that will help it cope with the coronavirus pandemic implications after reaching a staff-level agreement with the International Monetary Fund (IMF) on Friday.

The agreement is subject to approval by the IMF's Executive Board, which is expected to consider Egypt's request in the coming weeks, the IMF said.

"I am pleased to announce that the Egyptian authorities and the IMF team have reached staff-level agreement on economic policies that could be supported by a 12-month Stand-By Arrangement (SBA)," Uma Ramakrishnan, who leads the IMF mission, said in a statement.

"The SBA, with requested access of SDR 3.8 billion (equivalent to around US$5.2 billion), supports the authorities' efforts to maintain macroeconomic stability amid the COVID-19 shock while continuing to advance key structural reforms.

"This will safeguard the gains achieved by Egypt over the past three years and put the country on strong footing for sustained recovery as well as higher and more inclusive growth and job creation over the medium term.

"It will also aim to support health and social spending, improve fiscal transparency, and advance further reforms to spur private-sector-led growth and job creation," the statement read.

Last month, the IMF approved another financing package for Egypt -- a $2.77 billion Rapid Financing Instrument, as the country grapples with the economic fallout from the highly-contagious coronavirus.

Egypt said the new staff-level agreement reflects the confidence of international institutions in the country's monetary and financial policies and the way it's dealing with the COVID-19 crisis.

The finance ministry said in a statement the agreement will also "maintain the gains that have been reached in recent years thanks to the economic reform programme," referring to an ambitious programme the country launched in 2016 as part of a three-year $12 billion loan deal with the IMF.

The programme, which saw Egypt slash subsides and float its pound currency among other measures, helped it significantly decrease its annual inflation rate, raise international reserves and decrease its debt to GDP ratio to 90 percent in June 2019, the finance ministry added.

"Those results reflected positively on the international credit rates institutions, which kept Egypt's credit rate at a positive outlook," the statement added.

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