The International Monetary Fund (IMF) headquarters
The International Monetary Fund (IMF) said on Friday its executive board has approved a $5.2 billion standby loan to Egypt to help it cope with the coronavirus pandemic implications.
The 12-month Stand-By Arrangement (SBA) "aims to help Egypt cope with challenges posed by the COVID-19 pandemic by providing fund resources to meet Egypt’s balance of payments needs and to finance the budget deficit," the IMF said.
"The program would also help the authorities maintain the achievements made over the past four years, support health and social spending to protect vulnerable groups, and advance a set of key structural reforms to put Egypt on a strong footing for sustained recovery with higher and more inclusive growth and job creation over the medium term."
Last month, the IMF approved another financing package for Egypt -- a $2.77 billion Rapid Financing Instrument, as the country grapples with the economic fallout from the highly-contagious coronavirus.
Egypt recently said the new staff-level agreement reflects the confidence of international institutions in the country's monetary and financial policies and the way it's dealing with the COVID-19 crisis.
The finance ministry added that the agreement will also "maintain the gains that have been reached in recent years thanks to the economic reform programme," referring to an ambitious programme the country launched in 2016 as part of a three-year $12 billion loan deal with the IMF.
The programme, which saw Egypt slash subsides and float its pound currency among other measures, helped it significantly decrease its annual inflation rate, raise international reserves and decrease its debt to GDP ratio to 90 percent in June 2019, the finance ministry added.
"After a strong track record of successfully completing a home-grown economic reform program supported by the IMF’s Extended Fund Facility in 2016-2019, Egypt was one of the fastest growing emerging markets prior to the COVID-19 outbreak," the IMF said in its Friday statement.
"However, the significant domestic and global disruptions from the pandemic have worsened the economic outlook and reshuffled policy priorities."
Egypt's external debt reached an all-time high of $112.7 billion in December 2019, compared with $109.4 billion in the third quarter of 2019, according to Egypt’s Central Bank (CBE) data.