IMF to decide on $ 5.2 billion loan to Egypt

After reaching a deal on June 5, the IMF will today disburse an emergency standby agreement of $ 5.2 billion for

Photo: Reuters

After reaching a deal on June 5, the IMF will pay Egypt an emergency standby agreement of $ 5.2 billion (SBA) to Egypt today.

While the IMF previously disbursed a $ 2.7 billion emergency loan to Egypt in May, today’s SBA is designed to bolster Egypt’s macroeconomic stability. SBA loans are short-term instruments used to stabilize economies affected by balance of payments deficits, currency shortages and current account deficits.

Egypt has a 40-year history of unsuccessful attempts to restructure and strengthen its economy with the help of the IMF. But after four years of successfully implementing a 2016 lending program, Egypt stabilized its exchange rate imbalance, reformed its banking system, eliminated black currency markets, and liberalized its economy.

Today’s loan will be used to stabilize the trade imbalance of the Central Bank of Egypt and consolidate foreign exchange reserves until the economy reopens after the end of the COVID-19 epidemic. The precious leeway offered by the IMF in the midst of a global slowdown is a vote of confidence in Egypt’s ability to sustain the progress of the recovery. If Cairo strives to reduce high poverty rates and currency depreciation, there is a good chance that the current IMF reforms will sufficiently stabilize the Egyptian economy.

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