Egypt is expecting to secure final approval to obtain $2.7 billion from the International Monetary Fund (IMF) under a rapid financing loan scheme next week, an official told Bloomberg on Thursday.
Late April, Egypt’s Prime Minister Moustafa Madbouly announced that the country asked the IMF for a new financial support under both a Stand-By Arrangement (SBA) and the Rapid Financing Instrument (RFI), to shield the country’s economy from the fallout of the coronavirus pandemic.
The SBA is a preemptive step that will last one year and be coupled with a sovereign bond issuance programme to avoid any future gaps in Egypt’s current account, added the official, who gave the RFI figure and asked not to be identified because the matter is confidential.
Egypt is one of many African nations turning to the Washington-based lender as the pandemic hits economies worldwide.
A group of IMF staff is “in discussions with the authorities and expects to present the RFI request to the board on May 11,” Uma Ramakrishnan, IMF Mission Chief for Egypt, told Bloomberg, without giving an estimate for the expected funding.
No figure was given for the SBA with the IMF.
The Fund has already agreed a total of $10.4 billion in emergency coronavirus funding across Africa in recent weeks, including Nigeria, Kenya, Tunisia, and Mozambique.
In 2019, Egypt completed a sweeping IMF-backed reform programme which included a three-year $12 billion loan and sought to revive investors’ confidence.
The pandemic is putting pressure on some of Egypt’s main sources of foreign currency such as tourism, remittances and Suez Canal receipts, Bloomberg said. The country needs to bridge a funding gap of around $10 billion by end of 2020, according to estimates from investment banks EFG Hermes and Goldman Sachs Group Inc.
Egypt “is right to utilize cheap IMF financing when it is available and when it comes with few or no conditions,” Charles Robertson, the global chief economist at Renaissance Capital Ltd, told Bloomberg.
“We think Egypt remains a good investment for bond funds globally and they will be reassured further by IMF involvement.”
The RFI will enable Egypt to “address any immediate balance of payments needs and support the most affected sectors and vulnerable groups of people,” IMF’s managing director Kristalina Georgieva said in a statement after the request announced late April.
