Egypt’s central bank has agreed terms for $2 billion in financing from international banks, it said in a statement on Thursday, a move aimed at boosting its foreign reserves as the country seeks to avert an economic crisis.
“The central bank initiated a repurchase transaction with a consortium of international banks for a total amount of funding of $2 billion with a maturity of one year,” the statement said.
“This transaction complements a series of measures taken recently in order to unleash the vast potential of the Egyptian economy and instill confidence by normalizing local market conditions and bolstering economic activity whilst shoring up foreign currency reserves.”
Egypt has struggled to revive its economy and attract foreign inflows since a 2011 uprising drove away foreign investors and tourists, key earners of foreign currency.
Its foreign reserves fell to about $19 billion in October, far below the $36 billion it held on the eve of the revolt.
With its budget deficit widening, reserves dwindling and a currency black market booming, Egypt has embarked on an ambitious programme of economic reform and turned to the International Monetary Fund for a $12 billion loan to support its efforts.
Last week, the central bank took the dramatic step of floating the pound and raising fuel prices. It has also cut electricity subsidies and introduced Value Added Tax (VAT).
The IMF is expected to approve Egypt’s loan programme at its executive board meeting on Friday. It expects to receive the first $2.75 billion instalment on of the loan next week.
The central bank said the repurchase deal was provided by the banks against the entire amount of newly issued Egyptian dollar-denominated sovereign bonds with maturities of December 2017, November 2024 and November 2028 that are held by the central bank and listed on the Irish stock exchange.