Egypt secures a 12-month US$5.2 billion stand-by arrangement from IMF to cushion economy against COVID19 shocks

EGYPT – Egypt has secured a 12-month Stand-by Arrangement (SBA), with total access of about US$5.2 billion from IMF to cushion the economy against shocks arising from the COVID19 pandemic.

The new SBA arrangement, according to the IMF, aims to help Egypt cope with challenges posed by the COVID-19 pandemic by providing Fund resources to meet Egypt’s balance of payments needs and to finance the budget deficit.

The SBA will also enable the immediate disbursement of about US$2 billion and will support the authorities’ efforts to preserve the macroeconomic achievements made over the past four years, and advance key structural reforms.

Earlier this month, Egypt had secured a US$253 million loan from the African Development Bank (AfDB) to finance Egypt’s Electricity and Green Growth Support Programme (EGGSP).

The funding, according to Africa Energy Portal will help meet the government of Egypt’s financing requirements in the light of the COVID-19 pandemic.

After a strong track record of successfully completing a home-grown economic reform program supported by the IMF’s Extended Fund Facility in 2016-2019, Egypt was one of the fastest growing emerging markets prior to the COVID-19 outbreak.

However, the significant domestic and global disruptions from the pandemic have worsened the economic outlook and reshuffled policy priorities.

The government has responded decisively to the COVID19 crisis with a comprehensive package that supports health care needs, the economy, and the most affected individuals and sectors.

The Central Bank of Egypt has also taken several actions to support economic activity and borrowers.

“The new Stand-By Arrangement, together with recent RFI, supports the authorities’ ongoing efforts to mitigate the economic and social impact of the COVID19 crisis while maintaining macroeconomic stability and safeguarding past achievements,” said Ms. Antoinette Sayeh, IMF’s Deputy Managing Director and Acting Chair.

Ms Sayeh explained that the SBA supported policies will “focus on addressing the immediate crisis needs including critical spending on health, social programs to protect the most vulnerable, and assist directly affected sectors.”

“Maintaining social cohesion during this crisis period will be paramount for the success of the program,” Ms Sayeh advised.

She further noted that “enhanced communication and transparency around the policies and their implementation will be crucial to ensure broad support for the government’s reform efforts on behalf of the Egyptian people.”

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