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Egypt says proposed standby funding from IMF aimed at helping businesses

Sign outside the headquarters of the International Monetary Fund (IMF) in Washington, DC, 15 April, 2020 [SAUL LOEB/AFP via Getty Images]
Sign outside the headquarters of the International Monetary Fund (IMF) in Washington, DC, 15 April, 2020 [SAUL LOEB/AFP via Getty Images]

Egypt's talks with the IMF about a standby loan to help it through the coronavirus pandemic will focus on structural reforms to remove constraints on private businesses, Egypt's planning minister said on Tuesday.

The one-year IMF programme would help with any payment gaps businesses face as a result of the COVID-19 pandemic. Repayment would be spread out over the medium term.

Hala Saeed told the American Chamber of Commerce in Egypt on a video conference that it would include financing from bilateral and multilateral sources.

In 2016, Egypt agreed a $12 billion, three-year Extended Fund Facility programme with the International Monetary Fund designed to reduce its fiscal and balance of payment deficits.

"The 2016 programme was more on the fiscal and monetary side," Saeed said. "After the success of the first phase of reform, we are continuing the structural reform programme."

She said Egypt had already been working on structural reforms before the pandemic and had identified six priorities, including digital transformation, industry, agriculture and logistics.

Central bank deputy governor Rami Aboul Naga said last week Egypt was in talks with the IMF for more financial support. When asked about a Bloomberg News report that Egypt would seek a further $5 billion from the IMF and $4 billion from other sources for a total of $9 billion, Naga told Al Arabiya news channel that the number was close to that figure.

READ: Egypt to receive $50m from World Bank to confront COVID-19

The IMF last week had already approved one financing package for Egypt – a $2.77 billion Rapid Financing Instrument – to help Cairo close a gap in its balance of payments caused by the coronavirus outbreak.

Saeed said the economy grew by nearly 5% in the Jan-March quarter, down from 5.8% expected before the pandemic.

"It is 0.8 less than what we were aiming for, however, we are still positive with a high growth rate."

The government had been counting on the higher growth to help Egypt absorb the 750,000 to 850,000 workers who enter the labour market each year as well as part of the backlog in unemployment, she added.

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