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Egypt's Central Bank: New IMF Loan Not to Add Burdens to People

Egypt's Central Bank: New IMF Loan Not to Add Burdens to People

Friday, 15 May, 2020 - 10:15
Workers and engineers at a construction site in Egypt’s new administrative capital (Reuters)

The new financial agreement under which Egypt will obtain the new loan from the International Monetary Fund (IMF) does not require new economic reforms and will not impose any new burdens on citizens, the central bank deputy governor said.

Rami Aboul Naga noted that the $2.77 billion received by Egypt through an IMF Rapid Financing Instrument affirms the financing institutions’ trust in the country.

According to the deputy governor, IMF’s rapid response to Egypt’s request for this loan is the result of the economic achievements made and the high growth rates it has seen which have contributed to creating new job opportunities.

The Egyptian economy has been praised by credit rating institutions, which reflects the ability of the economy to overcome this crisis, he stressed.

Egypt has resorted to IMF loans to anticipate repercussions of the current crisis, he explained, adding that it is designed to help close a gap in its balance of payments as the new coronavirus outbreak takes its toll on the economy.

It is seeking a further tranche of loans under an IMF Stand-By Arrangement, Aboul Naga noted.

He further revealed that the new loan will be at least $5 billion, stressing that it will not contribute to any pressure on price levels and will be spent on health and social safety networks.

Egypt is seeking more than $5 billion from the IMF under a stand-by arrangement and $4 billion from other institutions, Bloomberg quoted an official as saying.

Aboul Naga pointed out that technical negotiations are taking place with the IMF almost daily to determine the financing gap in accordance with the scenarios for the effect of the crisis on some sectors.

The economic reform program implemented by Egypt since 2016 has proved a success in creating a strong economy that is capable of withstanding crises, Aboul Naga said on Wednesday.

He explained that Egyptians have born harsh measures, which were important for the economy’s growth and development.

The central bank pumped more than half a trillion pounds ($31.85 billion) to provide liquidity in the market, the official said, adding that they were directed to the productive sectors, especially the industrial, agricultural, real estate, and tourism.

“The cash pumped has helped in alleviating the repercussions of the coronavirus outbreak.”

Until mid-March, the economy’s indicators were very good and tourism revenues were not affected, he stated, adding that Egypt could have seen promising levels of growth had it not been the health crisis.

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