As of 27 October 2022, the International Monetary Fund (IMF) and Egypt have reached an agreement for EGP 68 billion (USD 3 billion), according to an IMF press release.
The loan comes in the form of a staff-level agreement to implement comprehensive economic policies and reforms for a 46-month period during Egypt’s ongoing economic struggles.
The agreement “aims to safeguard macroeconomic stability and debt sustainability, improve Egypt’s resilience to external shocks, strengthen the social safety net, and step-up reforms that underpin higher private-sector-led growth and job creation,” according to the IMF’s press release.
Another EGP 136.8 billion (USD 6 billion) could follow, the statement predicts.
This forecasted agreement is divided into an EGP 114 billion (USD 5 billion) multi-year financing package to be triggered for the fiscal year 2022/23, which “reflects broad international and regional support for Egypt,” and an EGP 22 billion (USD 1 billion) pending finance request to the IMF’s newly created Resilience and Sustainability Facility.
“Egypt’s international and regional partners [intend] to maintain economic stability, address macroeconomic imbalances and spillovers from the war in Ukraine, protect livelihoods, and push forward deep structural and governance reforms to promote private sector-led growth and job creation,” states the press release.
The loan program will include policies to “unleash private sector growth” which includes the gradual reduction of the state’s footprint. This will create a more robust competition framework, increase transparency, and improve trade facilitation.
“The authorities also plan to expand targeted social transfers and enhance spending on social assistance, health, and education. These reform measures will be critical to address long-standing constraints to Egypt’s higher, more sustainable, and more inclusive growth,” adds the press release.
This is Egypt’s second loan agreement with the IMF, excluding the COVID-19 emergency financial support. The first came in 2016, and intended to alleviate the country’s growing economic burdens and allow time for reforms and new policies to bear fruit.
This second loan arrives in light of Egypt’s mounting economic crises, which have sparked massive inflation, import restrictions, United States Dollar transfer limits, and a plummeting Egyptian Pound. With the loan arriving, Egypt looks forward to, once more, amending economic instability and reforming current practices.
This is a developing story.
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