Egypt to receive first tranche of IMF $5.2B loan during next few days

CAIRO – 29 June 2020: Egypt will receive the first tranche of $5.2 billion International Monetary Fund (IMF) loan over the next few days, Deputy Governor of the Central Bank of Egypt (CBE) Ramy Abu El Naga said Monday.

Abu El Naga clarified that the first tranche worth $2 billion, adding that his country will receive receive the remainder of the loan in two installments of $1.6 billion per installment within a year.

On Friday, IMF executive board approved a new $5.2 billion, 12-month Stand-By Arrangement that aims to help Egypt cope with the coronavirus pandemic and plug budget and balance-of-payments shortfalls.

Abu El-Naga added, in statements to Al-Arabiya Today channel, that the new financial agreement with the IMF, which is the credit preparation program that was approved last Friday, June 26, will be at easy and non-commercial interest rates and has a standard that is determined by the fund and that it has accounts announced by the fund. .

He explained that the credit preparedness program provides repayment within five years with a grace period of 3.25 years, explaining that the previous loan from the IMF was three years and reflects the state's need for a national program and it was important that there be an international partner with expertise which is the International Monetary Fund.

He considered that the financing came to enhance the implementation of reforms, and the decision was made by the Egyptian side to go into a three-year program, and at the present time the credit preparedness program came to reflect the role played by the Egyptian state and its vision of the required reforms and the continuation of ambitious reforms undertaken by the state.

The Deputy Governor of CBE confirmed that the aim of the program was to bridge a possible financing gap due to the shock experienced by all countries of the world against the background of the Corona pandemic, explaining that the Egyptian authorities have taken measures to confront the pandemic.

Regarding obtaining more funds from other international institutions, Abu El-Naga said that the current stage was in which the amount of the financing gap was determined, after which the state, in partnership with the fund, will determine the means and methods of financing.

He said that the negotiations focus on the state's ability to bridge the gap through negotiations with the fund and financial institutions, pointing to actually starting negotiations with strategic partners and some Gulf countries, as a natural result of Egypt's strong relations with those institutions and countries.

Earlier, an official source in the banking sector told MENA that Egypt paid back dets of $20 billion over the past four months to international finance and investment institutions.

Abu El-Naga stressed that the IMF or international institutions do not enter into financial agreements without ascertaining the ability to pay, which Egypt has committed to throughout the past years, as it has never failed to pay any external obligations.