Saudi Arabia agreed Tuesday to extend the terms of a $5 billion aid package to Egypt in March, Saudi state media said, in a move aimed at bolstering the North African country’s recent deal with the International Monetary Fund.
The extension reflects the generous directives of Custodian of the Two Holy Mosques King Salman bin Abdulaziz and Prince Mohammed bin Salman, Crown Prince and Prime Minister.
Egypt enjoys high growth potential in wake of its implementation of several structural reforms that have stimulated private sector growth and increased its competitiveness, and continued efforts to achieve high and more sustainable and inclusive growth rates.
The state-run Saudi Press Agency said the extension would allow Egypt to open “new financing channels with regional and international organizations” and help the completion of a preliminary $3 billion agreement the Middle East's most populous country reached with the IMF in October.
The Egyptian economy has been hard-hit by the coronavirus pandemic and the war in Ukraine. Egypt is the world’s largest wheat importer, most of which came from Russia and Ukraine. In the fallout of the war in Eastern Europe, Egypt has struggled to combat surging inflation, which peaked at over 16% in October.
Egypt's “staff level agreement” with the IMF last month is set to last for 46 months and aims to tackle Egypt's inflation problem and restructure its ailing economy. The terms of the preliminary agreement saw Egypt's government introduce a series of immediate economic reforms including a hike in its key interest rates and a shift towards a flexible exchange rate.
Egypt received a $12 billion bailout from the IMF in 2016, as President Abdel Fattah al-Sisi's government embarked on an ambitious reform program that saw prices surge.
