Egypt to repay $2.77 billion IMF loan over 5 years – mission chief

Egypt will repay a $2.77 billion Rapid Financing Instrument (RFI) loan from the International Monetary Fund over five years with an interest rate of one percent, IMF mission chief for Egypt said on Wednesday.

Uma Ramakrishnan said in a statement to an Egyptian satellite channel that the loan will be disbursed in one tranche.

Egypt is among 55 countries for which the IMF has approved their RFI requests, Ramakrishnan added.

The RFI funds are appropriated to be used in countering the coronavirus pandemic repercussions, especially for the healthcare sector, services, the neediest groups, and supporting individuals and companies affected by the crisis, she said.

The IMF official explained that the RFI loan is not subject to revisions as is the case with the Extended Fund Facility programme, which Egypt had benefited from in 2016 by receiving a $12 billion loan and completed in 2019.

On Monday, IMF’s executive board approved Egypt’s request for an emergency financial assistance of $2.772 billion (100 percent of the country’s quota) under the RFI to meet the urgent needs of the balance of payments owing to the outbreak of the pandemic.

The Fund announced that the purchase under the RFI entails exceptional access due to outstanding credit under the previous extended arrangement under the Extended Fund Facility.
“Egypt achieved a remarkable turnaround prior to the COVID-19 shock, carrying out a successful economic reform programme supported by the IMF’s Extended Fund Facility (EFF) to correct large external and domestic imbalances.” IMF said in a statement.

However, it said the pandemic and global shock pose an immediate and severe economic disruption that could negatively impact “Egypt’s hard-won macroeconomic stability if not addressed.”

“The authorities have launched a comprehensive package to contain the economic impact of the COVID-19 shock. The RFI will help alleviate some of the most pressing financing needs, including for spending on health, social protection, and supporting the most impacted sectors and vulnerable groups.”

Later on Tuesday, Egypt received $2.77 billion in emergency financing from the IMF.