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Wednesday, 6 May 2020

First tranche of fresh IMF funding to land on Monday -report

First tranche of fresh IMF funding to land on Monday -report: The government will receive USD 2.7 bn from the International Monetary Fund (IMF) next Monday as a first tranche of funding to help it withstand the global economic shock caused by the covid-19 pandemic, Masrawy reports, citing an unnamed central bank official. Authorities last month asked the fund for a one-year rapid financing instrument (RFI) to help plug shortfalls in the country’s balance of payments and a separate stand-by arrangement (SBA) to support fiscal reform.

Did Ahmed Moussa get it right on the new IMF package? We’re yet to hear anything official about the final size of the funding package, but TV show host Ahmed Moussa suggested that authorities are seeking north of USD 7 bn to help them through the crisis. We were fairly sceptical at the time, but Masrawy’s source has corroborated one of Moussa’s claims: that a USD 2.7 bn tranche would be delivered as early as 10 May. Moussa also said that a second tranche will arrive on our shores in June.

The IIF thinks we’re likely to receive around USD 8.4 bn: The Institute of International Finance (IIF) wrote in a note on Sunday that the IMF is likely to lend us a total of USD 8.4 bn through the RFI and SBA facilities. The fund will extend a USD 2.8 bn loan (100% of quota) under the RFI which will allow the government to ramp up health and welfare spending, provide relief to SMEs, and bolster foreign reserves, the IIF wrote. The IMF will also likely approve a two-year SBA giving Egypt access to funds worth 200% of its quota (around USD 5.6 bn). How much we end up receiving from the SBA would — in a similar fashion to the recent USD 12 bn extended fund facility — depends on financing needs, repayment capacity, and our track record in using previous IMF funds. The conditions, however, would be much less stringent than under the EEF, with the SBA having a shorter repayment period and fewer conditions.

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