Egypt negotiating IMF for second tranche of financial support – official

Egypt is negotiating for a second tranche of financial support from the International Monetary Fund (IMF) after receiving nearly $2.8 billion in emergency financing, the country’s central bank deputy governor said on Wednesday.

On Tuesday, Egypt has received $2.77 billion under IMF’s Rapid Financing Instrument (RFI) designed to help close a gap in its balance of payments as the new coronavirus outbreak takes its toll on the economy.

This time Egypt is seeking a further tranche of loans under IMF’s Stand-By Arrangement (SBA).

Both RFI and SBA schemes are designed for countries facing urgent or potential balance of payments problems.
Egypt is potentially eligible for around $4 billion per year under the SBA, according to analysts and information on the IMF’s website.

When asked about a Bloomberg News report that says Egypt would seek a further $5 billion from the IMF and $4 billion from other sources totalling $9 billion, Rami Aboul Naga told Al Arabiya news channel that the number was close to that figure.

The pandemic has brought Egypt’s tourism industry to a standstill, triggered major capital flight, and threatened remittances from Egyptian workers based abroad.

Egypt’s foreign reserves dropped for the second month in a row to $37 billion at the end of April from more than $45.5 billion two months earlier. However, Aboul Naga said the country currently has enough reserves to cover seven months’ worth of imports.

In late April, Egyptian Prime Minister Moustafa Madbouly announced that the country asked the IMF for a new financial support under both a SBA and the RFI to shield the country’s economy from the fallout of the pandemic.

Later in the same day of announcing the request, IMF’s managing director Kristalina Georgieva asserted in a statement that the Fund “fully supports” Egypt’s aim to safeguard the significant gains made under its successful Fund-backed reform programme.