File Photo: The International Monetary Fund logo (Photo: Reuters)
Egypt has reached a staff level agreement with the International Monetary Fund for an instalment of around $2 billion in its three-year, $12 billion loan programme, the IMF said in a press release on Friday.
The agreement is pending approval by the IMF executive board, according to the press release.
An IMF delegation visited Egypt from 25 October to 9 November to assess the progress of the loan programme, which was finalised in November 2016.
The IMF loan comes in support of Egypt’s fiscal reform programme, which aims to curb the growing state budget deficit and has included floating the Egyptian pound.
In the Friday release, the IMF praised the commitment of the Egyptian government to the reform programme, referring to the rise in Egypt's GDP to 4.2 percent in fiscal year 2016/17, compared to a projected 3.5 percent.
The IMF also praised the increasing confidence of investors, adding that the "portfolio investments into Egypt reached $16 billion this year and foreign direct investment rose by 13 percent."
The IMF also referred to the other positive steps such as a decline in headline inflation, and the narrowing current account deficit in dollar terms, as well as the budget performance which "was broadly in line with program projections with a primary deficit of 1.8 percent of GDP."
The IMF also underlined the Central Bank of Egypt's commitment to the reform programme, reflected in its monetary policy framework that is "underpinned by a flexible exchange rate regime which has eliminated chronic foreign exchange shortages and the parallel market," as well as the government's efforts to reduce its debt, through achieving a primary surplus in the current fiscal year.
However, the IMF stressed that reducing unemployment among young people and integrating women into the labour force are keys to Egypt's "economic liftoff and are the strongest and most sustainable form of social protection."
In July, Egypt received the final instalment of the first $4 billion tranche of the IMF loan.