The move came following a review of the country's economic reforms by an IMF team this week
IMF agree on Egypt's $2 billion loan
The International Monetary Fund said on Friday it has agreed to the disbursement of a US$2 billion loan after a review of Egypt’s economic reforms.
The IMF executive board is yet to approve and sign off on the transfer of the $2bn instalment - part of the three-year $12bn extended facility negotiated with Cairo last year.
In a statement issued by e-mail on Friday, a team from the fund - led by Subir Lall, the IMF’s assistant director in the European Department - which completed a visit to the country on Thursday, said: “The staff-level agreement on the second review reaffirms the authorities’ commitment to their reform programme supported by the IMF.
“Egypt’s economy continues to perform strongly, and reforms that have already been implemented are beginning to pay off in terms of macroeconomic stabilisation and the return of confidence.”
The statement added that while the reform process has required short-term “sacrifices”, seizing the opportunity “to transform Egypt into a dynamic, modern, and fast-growing economy will improve the living standards and increase prosperity for all Egyptians”.
Under the IMF programme's obligations, Egypt devalued its currency last year and cut energy subsidies. This saw the value of the Egyptian pound halve against the dollar and inflation soar to 30 per cent, though consumer prices have dipped in the last three months.
The Fund said the Egyptian economy picked up in the fiscal year ending June 2017, growing by 4.2 per cent and beating projections of 3.5 per cent growth.
“Meanwhile, the current account deficit narrowed in dollar terms, supported by the increase in non-oil exports and tourism receipts while non-oil imports declined,” the fund said.
“Reflecting increased investor confidence, portfolio investments into Egypt reached $16bn this year and foreign direct investment rose by 13 per cent."
The fund said headline inflation appears to have peaked in July and has been declining since then, "supported by the Central Bank of Egypt’s prudent monetary policy stance".
Once this latest $2bn tranche of the loan is disbursed, the IMF will have awarded $6bn under the three-year programme.