File Photo of the International Monetary Fund. (Photo: Reuters)
The coronavirus pandemic has caused significant disruption to the global economic outlook, Egypt being no exception. The government and the Central Bank of Egypt (CBE) have responded quickly with a comprehensive package to tackle the health emergency and support economic activity.
To this end, Egypt requested financial assistance from the International Monetary Fund (IMF), according to Director of the Communication Department and IMF spokesman Gerry Rice.
Rice held a press briefing on Thursday, during which he told Ahram Online the IMF has approved Egypt’s request of a 2.8 billion loan. Concerning Egypt’s request for a loan under the Stand-By Agreement (SBA), Rice said the IMF is still working with the Egyptian authorities on this request to design strong policies to support a strong economic recovery.
After discussing with the Egyptian authorities the duration, sum and the policy package of the loan under the SBA, the final approval will be granted by the IMF’s executive board, he added.
“The Rapid Finance Instrument (RFI) loan for Egypt carries an interest rate of one percent, which is a very low rate and will be repaid over a five-year period, which is a significant grace period,” Rice told Ahram Online.
On 11 May, the IMF’s executive board 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 loan has been disbursed in one tranche.
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.
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, according to a statement by the IMF.
The IMF said that Egypt’s authorities are committed to full transparency and accountability on crisis-related spending, including through publishing information on procurement plans and awarded contracts, as well as ex-post audits of such spending.
On 26 April Prime Minister Mostafa Madbouly announced that Egypt has filed a request to receive two loans under the RFI and SBA.
The IMF is expected to approve the disbursal of $200 million of Egypt’s quota under the SBA.