Foreign reserves on the rise thanks to fresh loans from WB, AfDB

CAIRO – 2 April 2017: Egypt's foreign reserves are projected to rise further in April after receiving $1.5 billion from multilateral banks: $1 billion from the World Bank (WB), the second tranche of a $3 billion loan agreement, and $500 million from the African Development Bank (AfDB.)

Egypt's reserves rode an upward wave since the country clinched a $12 billion deal with the International Monetary Fund (IMF) in November to support is ambitious economic reform plan. Egypt received $2.7 billion as the first tranche of the IMF loan and the second is expected in June after an official review by the fund.

“Fresh finance from the WB will likely push foreign reserves to $28 billion by March-end, up from $26.5 billion in February,” the head of the Research Department at Pharos Hoilding, Radwa el-Sewifi, told Egypt Today.

On Friday, the AfDB disbursed a second $500 million tranche of Egypt's loan, the bank's representative in Cairo, Leila Mokaddem, told Egypt Today, adding that "the money will be allocated to fill the budget deficit, improve the energy sector and enhance the business environment, in particular industrial licensing, opening the energy and gas sector to private investments and promoting financial inclusion through supporting micro small and medium enterprises ."

"The 3rd tranche of the AfDB loan will be disbursed by December," Mokaddem added.

Cairo has already started negotiating the WB's third tranche for the Second Fiscal Consolidation, Sustainable Energy and Competitiveness Programmatic Development Policy Financing (DPF), a day after receiving the second tranche last month.

This disbursement of the WB loan reaffirmed the WB's confidence in Egypt's progress in economic reform and its steady path towards achieving sustainable and inclusive development.

“The government has taken important steps in implementing key policy and institutional reforms that are laying down the foundations for accelerated job creation and inclusive growth. … The DPF supports the country’s inclusive economic reform program. Key to this are efforts to create jobs, spur growth and attract new investment," said Asad Alam, WB country director for Egypt, Yemen and Djibouti in an official statement.

To revive an economy hit by political turmoil since 2011’s January 25 Revolution and overcome a sharp dollar shortage that crippled import and manufacturing activities, Egypt adopted painful reforms including free-floating the currency, introducing a value added tax and slashing fuel subsidies.