IMF endorses first installement in second tranche of $12 bln loan to Egypt

The International Monetary Fund (IMF) approved the first batch – worth $2.3 billion – of the second tranche of a three-year $12 billion loan agreement with Egypt reached in November 2016, state-run news agency MENA reported.

The Central Bank of Egypt (CBE) received in July the final batch of the first $4 billion tranche of the IMF loan.

The First Deputy Managing Director David Lipton said in the statement that the results of Egypt’s economic reform program are “encouraging”.

“The economy is showing welcome signs of stabilization, with GDP growth recovering, inflation moderating, fiscal consolidation remaining on track, and international reserves reaching their highest level since 2011,” Lipton said, adding that the banking system was strong enough to buffer market shocks.

The Central Bank of Egypt’s (CBE) actions to control inflation could allow the gradual easing of interest rates, “but the CBE should remain vigilant and be prepared to tighten the monetary stance if demand pressures re-emerge,” he added.

In mid-August 2016, Egypt reached a staff-level agreement with the IMF over the $12 billion loan to support the country’s fiscal reform programme.

In mid-August 2016, Egypt reached a staff-level agreement with the IMF over the $12 billion loan to support the country’s fiscal reform programme.

In October, an IMF delegation conducted the second periodic review of Egypt’s economic reform programme ahead of providing the country with the second installment.

In 2014, the Egyptian government embarked on economic reforms in an attempt to curb the growing state budget deficit – which was estimated at 12.2 percent of GDP in 2015/16.

In early November 2016, Egypt’s central bank freely floated the pound and raised key interest rates as part of a set of reforms aimed at alleviating a dollar shortage and stabilising the country’s flagging economy.

Egypt’s foreign reserves increased to $36.723 billion by the end of November 2017, up from $36.703 in October, the CBE announced on Monday, according to state news agency MENA.

The reserves have been climbing since Egypt signed the $12 billion loan with the IMF in November 2016.

Source: Ahram Online

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