The International Monetary Fund will disburse its $5.2 billion standby loan to Egypt in tranches in 2021, said a top IMF official said on Wednesday.
During a web press conference held by the IMF with a number of journalists in the Middle East region, Jihad Azour said the Fund is currently designing a programme under its stand-by loan agreement (SBA) reached with Egypt earlier this month.
On June 5, the IMF announced it had reached a staff-level agreement with Egypt for a one-year, $5.2 billion standby loan to help the North African country grapple with the novel coronavirus pandemic and its economic fallout.
Azour explained that the standby loan would involve certain conditions that would need to be met, Ahram Online reported.
“After the completion of the EFF (Extended Fund Facility) programme with Egypt in July 2019, through which Egypt got the $12 billion loan to finance its economic reform programme, Egypt was already not in need for new loans thanks to its reforms that affected its macroeconomic indices positively,” Azour said.
The IMF and Egypt agreed on another programme to support structural reforms that would focus on boosting the private sector and SMEs, enhancing social protection nets, and reinforcing economic growth, he added.
However, owing to the novel coronavirus crisis and its harsh implications, Egypt has filed requests for two loans under the rapid finance instrument (RFI) and the SBA, Azour said.
In this regard, according to Azour, Egypt has received a $2.4 billion loan under the RFI, while the IMF is working on another loan that will be disbursed in tranches in 2021.
The loans are meant to maintain the gains made by Egypt’s economic reform programme and boost recovery efforts, the IMF official explained.
Azour also said Egypt has made significant progress in its economic performance, recording 5.5 to 6 percent in economic growth and raising net foreign reserves to record levels exceeding $45 billion. The country has managed to curb the inflation rate significantly to 5 percent, after it had reached more than 30 percent, he added.
“Tourism, transport, the Suez Canal, and exports are the most affected sectors amid the COVID-19 crisis in Egypt, which needs more efforts to resume its activity to offset losses,” Azour said.
He stressed that the coronavirus crisis is unprecedented for both the region and the globe, especially with the collapsed global oil prices, which have reached their lowest levels in 20 years.
Azour shared highlights from an IMF study, which is due to be released within days, revealing that the procedures taken by the countries in the Middle East region in the face of the pandemic have been effective in containing the virus impacts compared to more advanced countries.
He also added that Egypt, Saudi Arabia, and Qatar have managed to return to the financial markets amid the crisis to provide more funds for their economies.
Moreover, the IMF official stressed that overcoming the crisis will be slow for the region’s countries, while the new OPEC deal will make oil prices fluctuate more, especially with the reopening of economies.
He also said that the IMF has downgraded its outlook for global and regional economies, compared to April forecasts, on the back of the pandemic. He added that oil exporting countries are expected to witness a fall in their revenues by $200 billion to $240 billion in 2020 compared to 2019.
Given the severe implications of the crisis, Azour said that the IMF is expected to increase its inflows to the Middle East region by 70 percent compared to 2019. He stated that the countries in the region have to rearrange their priorities in terms of their economic policies.
Amid the crisis, 100 countries have filed for IMF facilities, while 69 countries have already received loans, Azour noted.
