IMF approves $3 billion loan to Egypt

By: MRT Desk

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IMF approves $3 billion loan to Egypt

The Executive Board of the International Monetary Fund (IMF) approved a loan of 3,000 million dollars from which Egypt will benefit over the next 46 months and from which it will have an immediate disbursement of 347 million dollars, the agency said today.

This loan, announced by the IMF on October 27, is part of the Extended Fund Facility and was granted to the Arab country for the implementation of an economic program whose objective is to “preserve macroeconomic stability, restore buffers and pave the way for sustainable, inclusive and private sector-led growth.”

This economic package includes “a permanent shift to a flexible rate regime to increase resilience to external shocks; monetary policy aimed at gradually reducing inflation (…); fiscal consolidation and debt management (…); and structural reforms to reduce the state’s footprint and facilitate private sector growth.”

At the end of the IMF Executive Board discussion, its Managing Director, Kristalina Georgieva, said that “Egypt showed resilience to the COVID-19 crisis with the support of previous programs supported by the Fund,” but began to “accumulate imbalances amid a stable exchange rate, high public debt, and backward structural reforms.”

To this he added the effects of Russia’s war in Ukraine, which “crystallized these pre-existing vulnerabilities, triggering capital outflows”, also derived from the loss of Russian and Ukrainian tourists who represented about 40% of the eight million visitors in 2021.

With this loan, Egypt is expected to reduce its public debt, increase social spending, and implement far-reaching reforms for all sectors of society.

This agreement is for 2,350.17 million SDRs, or special drawing rights, an IMF unit of account based on a basket of five major international currencies, equivalent to about 3,000 million dollars, the Washington-based international organization detailed.

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