IMF reaches staff-level agreement with Egypt on $5.2 B loan

CAIRO, 5 June 2020: The International Monetary Fund announced, Friday reaching a Staff-Level agreement on a 12-Month $5.2 Billion Stand-By loan arrangement.

“Following support under the IMF’s Rapid Financing Facility (RFI)—aims to alleviate the economic impact of the COVID-19 pandemic, helping maintain macroeconomic stability, strengthen the social safety net, and support reforms to spur private-sector-led growth and job creation.” IMF stated in a statement.

It was added that “in response to a request from the Egyptian authorities, an International Monetary Fund (IMF) mission led by Ms. Uma Ramakrishnan held virtual meetings from May 19 to June 5, 2020 with the Egyptian authorities to discuss IMF financial support for the authorities’ policy plans to ensure macroeconomic stability and a strong economic recovery.

At the end of the virtual discussions, Ramakrishnan issued the following statement:

“I am pleased to announce that the Egyptian authorities and the IMF team have reached staff-level agreement on economic policies that could be supported by a 12-month Stand-By Arrangement (SBA). The SBA, with requested access of SDR 3.8 billion (equivalent to around US$5.2 billion), supports the authorities’ efforts to maintain macroeconomic stability amid the COVID-19 shock while continuing to advance key structural reforms. This will safeguard the gains achieved by Egypt over the past three years and put the country on strong footing for sustained recovery as well as higher and more inclusive growth and job creation over the medium term. The SBA will also aim to support health and social spending, improve fiscal transparency, and advance further reforms to spur private-sector-led growth and job creation. The arrangement is also expected to catalyze additional bilateral and multilateral financial support.
“This agreement is subject to approval by the IMF’s Executive Board, which is expected to consider Egypt’s request in the coming weeks.”

Earlier on May Deputy Governor of the Central Bank of Egypt (CBE) Ramy Abu El Naga said that there are talks with the International Monetary Fund on a second package of financial support.

He added that Egypt's foreign exchange reserves are sufficient to meet import needs for a period of 7 months, which is a higher rate than international averages.

Abul-Naga pointed out in an interview with "Al-Arabiya" to the $ 2.8 billion rapid financing package for Egypt from the International Monetary Fund, emphasizing Egypt's ability to knock on the gates of financing institutions to boost these reserves in case future needs arise.