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Egypt's Proposed Stand-by Funding from IMF Aimed at Helping Businesses

Egypt's Proposed Stand-by Funding from IMF Aimed at Helping Businesses

Tuesday, 19 May, 2020 - 17:30
Vendors wait for customers in a popular tourist area named Khan el-Khalili at al-Hussein and Al-Azhar districts in old Islamic Cairo, Egypt August 18, 2016. (Reuters)
Asharq Al-Awsat

Egypt’s talks with the IMF about a Stand-By Agreement to help it through the coronavirus pandemic will focus on structural reforms to remove constraints on private businesses, Egypt’s planning minister said on Tuesday.

The one-year IMF program would help with any payment gaps businesses face as a result of the COVID-19 pandemic. Repayment of the Stand-By facility would be spread out over the medium term.

Hala Saeed told the American Chamber of Commerce in Egypt via a webinar that it would include financing from bilateral and multilateral resources.

In 2016, Egypt agreed a $12 billion, three-year Extended Fund Facility program with the International Monetary Fund designed to reduce its fiscal and balance of payment deficits.

“The 2016 program was more on the fiscal and monetary side,” Saeed said, according to Reuters. “After the success of the first phase of reform, we are continuing the structural reform program.”

She said Egypt had already been working on structural reforms before the pandemic and had identified six priorities, including digital transformation, industry, agriculture and logistics.

“This structural reform is basically focusing on integrating more of the private sector,” she said. It would look at “all of the bottlenecks that would be a hurdle for all the private sector engagement.”

Central bank deputy governor Rami Aboul Naga said last week that Egypt was in talks with the IMF for more financial support. When asked last week about a Bloomberg News report that Egypt would seek a further $5 billion from the IMF and $4 billion from other sources for a total of $9 billion, Naga told Al Arabiya news channel that the number was close to that figure.

The IMF last week had already approved one financing package for the country - a $2.77 billion Rapid Financing Instrument - to help Egypt close a gap in its balance of payments caused by the coronavirus outbreak.

The 2016 IMF agreement included a sharp devaluation of the currency, increases in domestic energy prices and the introduction of a 14% value-added tax.

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