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Sunday, 14 May 2017

Egypt passes IMF inspection and will receive the second tranche of the loan

Egypt is now just a few signatures away from receiving the second tranche of its USD 12 bn loan from the IMF,after the delegation assessing the country’s economic reform progress gave it a clean bill of health on Friday. The IMF’s executive board will now have to sign off on a staff-level agreement announced Thursday to disburse the USD 1.25 bn tranche, which Egypt Mission Chief Chris Jarvis signed with the government, according to a “This agreement is a vote of confidence by the IMF staff in the continued implementation of the Egyptian authorities’ program,” Jarvis said in the statement, praising decisions including the float of the EGP, the implementation of the value-added tax, and subsidy reforms. It remains unclear when Egypt is to receive its funds, but chatter says sometime in June.

Curbing inflation and continued progress on reform will be top priorities for the government and the central bank, Jarvis added. He also stressed that the importance of strengthening Egypt’s social safety net “to protect the most vulnerable people in Egypt while reform is underway.”

Jarvis gave props to the FY2017-18 budget, which he described as “very strong” and if approved, “will place public debt on a clearly declining path to sustainable levels.” Jarvis was particularly happy that the governmentdecided to raise the VAT in the next fiscal year and that it’s pushing forward with the energy subsidy phase-out scheme. He was also quite optimistic about the prospects offered by the recently-passed investment and industrial permits acts.

News of the staff-level agreement is being played prominently by Bloomberg and Reuters.

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