IMF Reaches Staff-Level Deal With Egypt to Unlock $1.25 BillionBy
Egyptian officials have said they expect the funds in June
IMF praises central bank, finance ministry for reforms
Egyptian authorities have reached a staff-level agreement with the IMF that would help unlock the second installment of a $12 billion loan to the Arab country, the fund said.
The accord, subject to the approval of the IMF’s Executive Board, will allow Egypt to receive $1.25 billion. Egyptian officials have said that they expect to receive the funds in June, bringing total disbursements under the program to about $4 billion.
The Washington-based lender, in a statement released on Friday, commended Egypt’s efforts to restore investor confidence in an economy battered by unrest since the 2011 Arab Spring. IMF officials said before the review that curbing inflation, which surged to more than 30 percent after the central bank floated the currency in November, should be the main priority of the next phase of reforms.
“The authorities see reducing inflation as a key priority for safeguarding the welfare of people across Egypt,” Chris Jarvis, the IMF mission chief, said in the statement. “We support the Central Bank of Egypt’s objective to bring down the rate of inflation to single digits over the medium term consistent with its price stability mandate. We are confident that the central bank has the tools to achieve this.”
Egypt abandoned currency controls and raised fuel prices, steps that were key to securing the IMF deal in November. The agreement helped trigger foreign investments in the nation’s stocks and bonds. Manufacturing has rebounded strongly and exports have “increased significantly,” the IMF said.
“This agreement is a vote of confidence by the IMF staff in the continued implementation of the Egyptian authorities’ program,” Jarvis said. “It is also testimony to the great efforts the Government and the Central Bank of Egypt have been making to reform the economy.”
He also praised the Finance Ministry for drafting a “very strong budget,” which would help put public debt on a declining path, if approved by parliament.