Egypt receives first $1 billion tranche of World Bank loan

Egypt announced on Friday that it had received the first $1 billion tranche of a $3 billion three-year loan from the World Bank aimed at supporting the government’s reform programme.

Egypt has been negotiating billions of dollars in aid from various lenders to help revive an economy battered by political upheaval since the 2011 revolt and to ease a dollar shortage that has crippled import activity and hampered recovery.

The turmoil has seen foreign reserves more than halve from some $36 billion before the uprising to $16.564 billion in August.

The World Bank had agreed to provide the first $1 billion in December but was waiting for the government’s economic programme, which outlines the broad strokes of its reform plans, to be passed by parliament.

A long-delayed Value-Added Tax (VAT) was one of the reforms agreed to as part of the first tranche. Parliament approved the tax in August.

“We are happy to partner with Egypt in implementing its economic programme which helps create job opportunities, attracts investment and strengthens growth,” Asad Alam, the World Bank’s Country Director for Egypt, said in the statement.

Egypt reached a preliminary agreement with the International Monetary Fund in August for a $12 billion three-year lending programme to help it plug its funding gap and stabilise markets.

But the deal requires Egypt to secure a further $6 billion in bilateral financing from other countries. The government is in advanced talks with Saudi Arabia to secure a new deposit worth $2-3 billion that would go towards that requirement.

The United Arab Emirates agreed in August to provide the Egyptian central bank with a $1 billion deposit for a duration of six years.

The $3 billion World Bank loan does not count as part of the required $6 billion, neither does an agreed $1.5 billion loan from the African Development Bank of which Egypt has already received a $500 million tranche.

Source: Reuters