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Sunday, 28 June 2020

IMF gives final nod on USD 5.2 bn in funding to Egypt

The IMF has approved a one-year USD 5.2 bn standby loan for Egypt, helping the country plug a balance of payments shortfall and finance its budget deficit, the fund’s executive board said in a statement on Friday. The approval allows for the immediate disbursal of USD 2 bn, with the remainder to be doled out in two tranches after staff reviews, a dance Egyptian policymakers are familiar with after USD 12 bn, three-year extended funding facility we drew following the float of the EGP. The IMF had no comment on the terms of the financing.

What will the money be used for? The funding will support healthcare and social programs for the vulnerable, protect and advance structural reforms, and boost private sector growth and job creation, IMF deputy managing director Antoinette Sayeh said.

The new loan is in addition to a USD 2.8 bn rapid financing instrument Egypt received from the IMF last month. The government is still seeking an additional USD 4 bn from undisclosed lenders to help it weather covid-19, a government official said last month.

Fitch Ratings said last month that fresh funds from the IMF will boost investor confidence in Egypt as portfolio outflows from emerging markets reverse. The funds may also help Egypt cut back on local borrowing to reduce the cost of servicing its debt, according to the Finance Ministry.

The news is getting plenty of digital ink this morning: Bloomberg | Wall Street Journal | Reuters | Associated Press.

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