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Wednesday, 18 December 2019

Is Egypt seeking a Standby Credit Facility from the IMF?

Is Egypt seeking a standby credit facility from the IMF? Egypt’s post-loan agreement with the IMF is could take the form of a standby credit facility, which “provides financial assistance to low-income countries … with short-term balance of payments needs,” unnamed government sources tell the local press. The facility’s duration is expected to be two years, which the fund says should be the maximum amount of time needed to resolve a country’s financing needs in order to be eligible for the facility. According to the sources, the government is hoping to have the agreement signed by 1Q2020, which is consistent with recent statements that the agreement could be finalized as early as March.

Background: The Finance Ministry had previously said that Egypt is eyeing a non-loan agreement with the IMF following the expiry of the USD 12 bn Extended Fund Facility, and initially said we could sign said agreement by October. IMF officials had initially poured cold water on the prospect of a cooperation framework, saying that Egypt would have to complete its three-year program with the fund before trying to get a second helping. The IMF’s Middle East and Central Asia Director Jihad Azour said in October that any renewed engagement between Egypt and the fund would likely focus on developing the private sector, strengthening welfare provisions, and increasing the transparency of state organizations.

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