Egypt expects to receive the first $4 billion instalment of a $12 billion three-year IMF loan within four and 6 weeks, Finance Minister Amr el-Garhy said in a news conference Thursday.
The International Monetary Fund had earlier on Thursday announced reaching an agreement to grant Egypt a three-year loan to support a government reform programme aimed at plugging a budget gap and rebalancing currency markets.
The loan agreement is subject to final approval by the IMF’s executive board, which is likely to consider Egypt’s request in the coming weeks.
Minister el-Garhy hold a press conference later on the day with IMF’s mission in Cairo, Chris Jarvis, and central bank governor Tarek Amer.
“Egypt is a strong country with great potential but it has some problems that need to be fixed urgently,” the head of the IMF’s mission in Cairo, Chris Jarvis, said.
Among the reforms agreed are subsidy cuts, introducing Value Added Tax (VAT) and reducing bureaucracy for foreign investors. The IMF also wants Egypt to focus monetary policy on easing the chronic dollar shortage and reduce inflation to single digits.
“The programme aims to improve the functioning of the foreign exchange markets, bring down the budget deficit and government debt, and to raise growth and create jobs,” Jarvis said in a statement.
The IMF’s Jarvis told a news conference that the aim of the exchange rate and monetary policy was to end hard currency shortages and cut inflation to single digits.
“Moving to a flexible exchange rate regime will strengthen competitiveness, support exports and tourism and attract foreign direct investment. This would foster growth and jobs and reduce financing needs,” he said.
Central Bank Governor Tarek Amer has said that fixing the Egyptian pound had been a mistake but it would not be floated until foreign reserves are rebuilt to at least $25 billion.