The anticipated IMF loan won’t lead to price hikes in Egypt; says PM

Egypt’s anticipated one-year bailout loan from the International Monetary Fund (IMF) will not lead to a hike in the prices of commodities and services, Prime Minister Moustafa Madbouly said on Wednesday.

Earlier this week, Egypt announced it had requested the IMF for financial assistance to deal with the economic fallout of the novel coronavirus pandemic.

Madbouly asserted that the IMF loan would be a “proactive step” against potential repercussions on Egypt’s economy, and it aimed to protect foreign currency reserves and preserve the gains achieved by economic reforms in recent years.

The new loan “will not have any negative effects on the lives of citizens, whether in terms of raising prices of commodities, services or otherwise,” Madbouly told a cabinet meeting via video conference.

The loan is linked to structural reforms only, he stressed.

To date, many Egyptians are struggling due to the austerity measures adopted under the economic reform programme tied to a three-year $12 billion loan deal signed with the IMF in November 2016. Under the reform programme, the government had to float the domestic currency, cut energy subsidies, and introduce a value-added tax.

Egypt is requesting the new loan under the IMF’s Rapid Financing Instrument (RFI) and a Stand-By Arrangement (SBA), said a statement by the Fund’s Managing Director Kristalina Georgieva earlier this week.