Egypt says requested standby funding from IMF to help businesses through coronavirus

The standby loan request Egypt has made to the International Monetary Fund (IMF) to help it through the coronavirus pandemic will focus on structural reforms to remove constraints on private businesses, planning minister said Tuesday.

The one-year IMF programme will help with any payment gaps businesses face as a result of the pandemic. Repayment is expected to be spread out over the medium term.

Speaking to the American Chamber of Commerce in Egypt on a video conference, Minister Hala al-Saeed said it would include financing from bilateral and multilateral sources.

In 2016, Egypt agreed a $12 billion, three-year Extended Fund Facility programme with the IMF designed to reduce its fiscal and balance of payment deficits.

“The 2016 programme was more on the fiscal and monetary side,” al-Saeed said.

“After the success of the first phase of reform, we are continuing the structural reform programme.”

The minister said Egypt had already been working on structural reforms before the outbreak of the coronavirus and had identified six priorities, including digital transformation, industry, agriculture, and logistics.

The IMF last week had approved one financing package for Egypt – a $2.77 billion under its Rapid Financing Instrument (RFI) – to help the country close a gap in its balance of payments caused by the coronavirus outbreak.

Egypt’s economy grew by nearly 5 percent in the January-March quarter, down from 5.8 percent expected before the pandemic, al-Saeed said.

“It is 0.8 less than what we were aiming for, however, we are still positive with a high growth rate.” she added.

The government had been counting on the higher growth to help Egypt absorb the 750,000 to 850,000 workers who join the labour market each year as well as part of the backlog in unemployment, the minister said.