Egypt secures USD5.2 billion IMF loan amid virus fallout

CAIRO (AP) – The International Monetary Fund (IMF) on Friday approved Egypt’s request for a USD5.2 billion loan as the country’s economy reels from the financial fallout of the global coronavirus pandemic.

The one-year arrangement, which comes on top of a separate USD2.77 billion emergency financing announced last month, aims to boost Egypt’s social spending, spur job creation and advance structural reforms to “put Egypt on a strong footing for sustained recovery”, the IMF said in a statement.

Egypt had been one of the fastest-growing emerging markets in the world before the pandemic. Now, the IMF warned, disruptions “have worsened the economic outlook and reshuffled policy priorities”.

There was no immediate comment from the Egyptian government on the loan’s approval.

The Arab world’s most populous country is struggling to cope with a collapse of critical sources of income, including tourism revenue, remittances from Egyptian workers abroad, shipping fees from the Suez Canal and gas and oil revenues.

Egypt only just emerged from a three-year economic overhaul after securing a USD12 billion IMF loan in late 2016. The government’s significant reforms included floating the currency, slashing key subsidies and imposing a value-added tax.

The austerity measures won President Abdel Fattah el-Sisi praise from Cairo’s Western backers and bankers, and helped attract foreign investment after years of political turmoil that followed the 2011 popular uprising. But the overhaul also dramatically hiked prices for everything from electricity to drinking water, squeezing the poor and middle class.

Before the pandemic threw millions of casual labourers out of work, one in three Egyptians was already living in poverty, according to government figures.