File Photo: International Monetary Fund (IMF) logo (Photo: Reuters)
Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF) Jihad Azour has said that the IMF is currently working on Egypt’s request for a loan under the stand-by agreement (SBA), and is designing a program for such a loan for consideration by the IMF’s Executive Board.
Speaking to Ahram online during a web press event on Wednesday, Azour explained that the SBA loan would include certain conditions that would need to be met.
“After the completion of the EFF program with Egypt in July 2019, through which Egypt got the $12 billion loan to finance its economic reform program, Egypt was already not in need for new loans thanks to its reforms that affected its macroeconomic indices positively,” Azour said during the IMF event for journalists from the MENA region.
The IMF and Egypt agreed on another program to support the second wave of economic reforms that focuses on structural reform, boosting the private sector and SMEs, enhancing social protection nets and reinforcing economic growth, Azour said.
However, owing to the COVID-19 crisis and its harsh implication, Egypt has filed requests for two loans under the rapid finance instrument (RFI) and the stand-by agreement, Azour added.
In this regard, according to Azour, Egypt has received a $2.4 billion loan, while the IMF is working on another loan that will be disbursed in tranches in 2021.
The loans are meant to maintain the gains made by Egypt’s economic reform program and boost recovery efforts, according to Azour.
He added that Egypt has made significant progress in its economic performance, recording 5.5 to 6 percent in economic growth and raising net foreign reserves to record levels exceeding $45 billion, in addition to curbing the inflation rate significantly to 5 percent, after it had reached more than 30 percent.
“Tourism, transport, the Suez Canal, and exports are the most affected sectors amid the COVID-19 crisis in Egypt, which needs more efforts to resume its activity to offset losses,” Azour told Ahram Online.
Azour stressed that the COVID-19 crisis is unprecedented for the region and the globe, especially with the collapsed global oil prices, which have reached their lowest levels in 20 years.
Azour shared highlights from an IMF study, which will be released within days, revealing that the procedures taken by MENA countries to contain the pandemic have been effective in containing the virus’ impacts compared to more advanced countries.
He also added that Egypt, Saudi Arabia and Qatar have managed to return to the financial markets amid the crisis to provide more funds for its economy, which reflects the hardiness of these countries’ economies.
Azour stressed that overcoming the crisis will be slow for the region’s countries, while the new OPEC deal will make oil prices fluctuate more, especially with the reopening of economies.
He also said that the IMF has downgraded its outlook for global and regional economies, compared to April forecasts, on the back of the pandemic, adding that oil exporting countries are expected to witness a decline in their revenues by $200 billion to $240 billion in 2020 compared to 2019.
Given the severe implications of the crisis, Azour said that the IMF is expected to increase its inflows to the MENA region by 70 percent compared to 2019, adding that region’s countries have to rearrange their priorities in terms of their economic policies.
Amid the crisis, 100 countries have filed for IMF facilities, while 69 countries have already received loans.