International Monetary Fund Mission Chief for Egypt Uma Ramakrishnan said that the $2.77 billion loan that the IMF Executive Board approved for Egypt under the Rapid Financing Instrument (RFI) will be repaid over five years with an interest rate of one percent.
Ramakrishnan said in her statement to an Egyptian satellite channel on Tuesday that the loan will be disbursed in one tranche, adding that Egypt is among 55 countries for which the IMF has approved their RFI requests.
She said RFI funds are appropriated to be used in countering the COVID-19 repercussions, especially for the healthcare sector, services, the neediest groups, and supporting individuals and companies affected by the crisis.
The mission chief stated that the RFI loan is not subject to revisions as is the case with the Extended Fund Facility programme that Egypt had benefited from in 2016 by receiving a $12 billion loan.
On Monday, the Executive Board of the IMF approved Egypt’s request for an emergency financial assistance of $2.772 billion (100 percent of Egypt’s quota) under the RFI to meet the urgent needs of the balance of payments owing to the outbreak of the COVID-19 pandemic.
The IMF announced that the purchase under the RFI entails exceptional access due to outstanding credit under the previous extended arrangement under the Extended Fund Facility.
Egypt achieved a remarkable turnaround prior to the COVID-19 shock, carrying out a successful economic reform programme supported by the IMF’s Extended Fund Facility to correct large external and domestic imbalances, the IMF stated.
It added that the pandemic and global shock posed an immediate and severe economic disruption that could negatively impact Egypt’s hard-won macroeconomic stability if not addressed.
The authorities have launched a comprehensive package to contain the economic impact of the COVID-19 shock. The RFI will help alleviate some of the most pressing financing needs, including spending on health, social protection, and supporting the hard-hit sectors and vulnerable groups.
The IMF announced it remains closely engaged with the Egyptian government and the Central Bank of Egypt and stands ready to provide policy advice and further support as needed.