Egypt receives initial $2.75 bln after IMF loan approval; dollar slips

Bassem Abo Alabass , Menna Alaa El-Din , Saturday 12 Nov 2016

Tarek Amer
Egyptian Central Bank Governor Tarek Amer speaks during a press conference at the Central Bank of Egypt in Cairo. (AP)

The Central Bank of Egypt (CBE) has confirmed to Ahram Online that it received on Friday an initial $2.75 billion from the International Monetary Fund (IMF) following the board’s approval for Egypt’s $12 billion loan.

CBE governor Tarek Amer told Ahram Online that the IMF dispatched the initial batch to Egypt immediately following the board’s approval on Friday.

Further disbursements will depend on the country's economic performance and implementation of reforms, according to the fund.

Amer also told Ahram Online that the loan will help the country’s foreign reserves jump to more than $23 billion from the current $19.04 billion registered at the end of October.

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

In mid-August, Egypt reached a staff-level agreement with the IMF 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 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 IMF board said in a statement.

Dollar declines against EGP 

Following Friday’s announcement, the official exchange rate of the greenback has already fallen to an average of EGP 15.9 per US dollar on Saturday, from a registered EGP 17.8 prior to the weekend, according to three major banks surveyed by Ahram Online.

Among the banks surveyed was the state-owned National Bank of Egypt (NBE) and the Commercial International Bank (CIB), Egypt’s largest private bank.

The parallel market’s activity has fallen since the CBE’s decision to float the country's pound last week.

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