You are here

IMF chief to recommend $12b Egypt loan approval

By AFP - Nov 08,2016 - Last updated at Nov 08,2016

People walk past a closed exchange bureau with an advertisement showing images of the US dollar and other foreign currency in Cairo, Egypt, on October 12 (Reuters photo)

WASHINGTON — International Monetary Fund (IMF) chief Christine Lagarde said Tuesday she will recommend the institution approve a $12 billion loan for Egypt when the board meets Friday to support the country's "ambitious" reform programme.

Lagarde praised the country's economic reforms, including floating the Egyptian pound last week, and said the loan is needed to help restore stability and growth to the economy.

The IMF had made floating the pound — which resulted in a steep devaluation and sharp price rises — a condition of the loan.

Egyptians are looking at a period of hardship as the government unrolls austerity measures ahead of the IMF programme. The country has endured months of shortages of products ranging from sugar to baby formula.

Cairo governments had avoided the measures fearing unrest, but President Abdel Fattah Al Sisi says Egypt no longer has the luxury of postponing them.

The November 3 move came amid a dollar crunch that led to a thriving black market and a slump in imports, and caused the pound to plunge to about 16 to the US dollar from 8.9.

The government also announced a 7 per cent salary increase for civil servants, who number about six million out of a total population of more than 90 million.

Lagarde said in a statement that the moves, which also include cutting fuel subsidies, "will notably improve Egypt's external competitiveness, address shortages of foreign currency, support exports and tourism and help attract foreign investment."

 

The programme aims "to put the country's economy on a sustainable path and achieve job-rich growth", she said.

up
109 users have voted.

Add new comment

CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.
1 + 4 =
Solve this simple math problem and enter the result. E.g. for 1+3, enter 4.

Opinion

Newsletter

Get top stories and blog posts emailed to you each day.