IMF agrees initially on granting Egypt last tranche of loan

Xinhua News Agency | May 17, 2019 at 1:55 PM

CAIRO, May 17 (Xinhua) -- The International Monetary Fund (IMF) and the Egyptian authorities have reached a staff-level agreement on the review of Egypt's economic reform program which will finalize granting Egypt 2 billion U.S. dollars, the IMF said on Friday in a statement.

"The staff-level agreement is subject to approval of the IMF's Executive Board Completion, upon which Egypt will receive the six tranche of 2 billion U.S. dollars of the three-year IMF loan, bringing total disbursements under the program to about 12 billion U.S. dollars," according to the statement.

An IMF team visited Egypt on May 5-16 to conduct the final review of Egypt's economic reform.

Over the past three years, the Egyptian authorities have carried out an ambitious home-grown reform program which aimed to correct significant external and domestic imbalances, promote inclusive growth and job creation and strengthen social spending, according to the IMF.

The IMF report highlighted the GDP growth accelerated from 4.2 percent in 2016/2017 to 5.3 percent in 2017/2018, while the unemployment rates declined to below 12 percent.

Other factors that positively help reach the agreement, according to the report, is that the current deficit narrowed to 2.4 percent of GDP in 2017/2018 from 5.6 percent the year before.

The report also mentioned that the increase of the foreign reserve from 17 billion U.S. dollars in 2016 to 44 billion dollars in March 2019 has helped Egypt become more resilient to the elevated uncertainty in the external environment.

"The Central Bank of Egypt's monetary policy helped bring down annual inflation from 33 percent in July 2017 to 13 percent in April 2019," it added.

Fakhry al-Fiqqy, former IMF's advisor, said "approving the last tranche of the loan meant Egypt has got an international certificate about the ability of its economy to revive."

"Egypt has large public assets that could be transferred easily to profitable institutions," the economic expert told Xinhua.

He explained that the big problem in Egypt is the administration of some institutions.

He hailed the government's efforts in helping the private sector invest and create jobs, attributing it to improving access to industrial land, promoting competition, improving transparency and accountability of state-owned enterprises, and fighting corruption.

Egypt agreed on a three-year 12-billion-dollar IMF loan program in November 2016 that is tied to ambitious economic reforms such as subsidy cuts, tax hikes, enacting the value-added tax, as well as the devaluation of its local currency.

Egypt received so far 10 billion dollars of the total loan.