Latest IMF $2 bln disbursement to be used to reduce budget deficit: CBE official

Ahram Online , Sunday 24 Dec 2017

The $2 billion tranche is set to be disbursed this week

Central Bank of Egypt
File photo: Central Bank of Egypt's headquarters is seen in downtown Cairo, Egypt March 8, 2016 Reuters

The latest $2 billion loan disbursement from the International Monetary Fund (IMF), which is set to be delivered to Egypt this week, will be allocated to reducing the budget deficit and the financing gap, a Central Bank official told state news agency MENA.

This will bring the total amount disbursed under the loan programme to about $6.08 billion, according to the IMF.

The IMF Executive Board completed on 20 December the second review of Egypt’s economic reform programme, under the $12 billion three-year Extended Fund Facility approved in November 2016.

“Egypt’s reform programme is showing welcome signs of stabilisation, with GDP growth recovering, inflation moderating, fiscal consolidation on track, and international reserves at the highest level since 2011,” the IMF said in a statement.

Egypt's foreign currency reserves reached $36.723 billion in November, up from $36.703 billion at the end of October.

“By tightening monetary policy early in the year, the Central Bank of Egypt (CBE) has managed to reverse high inflation, which was the main risk to macroeconomic stability,” IMF First Deputy Managing Director and Acting Chair David Lipton stated.

“The continuation of this disinflationary trend could open the door to a gradual easing of interest rates, but the CBE should remain vigilant and be prepared to tighten the monetary stance if demand pressures re-emerge,” Lipton added.

Egypt's annual urban consumer price inflation fell to 26 percent in November from 30.8 percent in October.

The next meeting for the CBE Monetary Policy Committee is scheduled on Thursday to decide on interest rates.

“The banking system has also remained resilient to moderate shocks. The outlook is favourable, but will require sustained efforts to maintain prudent policies and advance structural reforms to support the authorities’ medium-term objective of inclusive growth and job creation,” according to Lipton.

The CBE paid back $1.2 billion to the African Export Import Bank this month over two tranches, according to MENA.

Egypt is also expected to pay back $700 million in January to the Paris Club, an informal group of official creditors who provide debt treatment to countries undertaking economic reforms.

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