CAIRO– The International Monetary Fund (IMF), said that, its executive board had approved a loan to Egypt of about three billion U.S. dollars over 46 months.
The decision enables an immediate disbursement of about 347 million dollars to Egypt, “which will help meet the balance of payments need, and provide support to the budget,” the IMF said in a statement, adding, the loan package is expected to encourage Egypt’s international and regional partners to provide an extra 14 billion dollars, to finance the country.
According to the IMF, the financial support was granted, in exchange for an economic reform programme from the Egyptian government, which it hopes, can pave the way for “sustainable, inclusive and private-sector-led growth.”
The U.S.-based finance institution has also asked Egypt to make “a permanent shift to a flexible exchange rate regime,” ensure the “downward trajectory in public-debt-to-GDP,” reduce “the state footprint,” “facilitate private-sector-led growth” and more.
The IMF’s loan comes at a time when Egypt is suffering high inflation and foreign currency shortage, after the Russia-Ukraine crisis prompted capital flight from emerging markets.
Egypt’s annual urban consumer inflation rate rose from 16.2 percent in Oct, to 18.7 percent in Nov, marking the highest increase since Dec, 2017, when it reached 21.9 percent.
Some Egyptian economists considered the approved IMF loan “a certificate of confidence” in the Egyptian economy.
“The international business community has been waiting for this certificate of confidence, as the IMF will be evaluating and reviewing Egypt’s economic and structural reform programme biannually, for the coming four years,” Fakhri al-Fiqi, an Egyptian economic professor and head of the parliamentary planning and budget committee, said.
Al-Fiqi explained that, the IMF support package, along with the anticipated additional 14 billion dollars from other partners, will make up for the hot money withdrawal and the foreign currency shortage, and eventually contain inflation.
“Inflation is expected to gradually slow down over the coming four years to 4-5 percent as it used to be, in which case, it will be affordable to average Egyptian citizens,” the expert said.
Egypt carried out a three-year economic reform programme, that started in late 2016, with the support of a 12-billion-dollar loan from the IMF.
Source: NAM NEWS NETWORK