The International Monetary Fund has reached in a staff-level accord with Egypt for a $5.2 billion standby loan with a validity of 1-year which will support the North African country struggling with the novel coronavirus pandemic and subsequent economic fallout.
The deal, which should be penned by the Fund’s executive board, would protect the economic progress obtained by Egypt over the past three years and will put the country on a strong state for a continuous recovery amid the pandemic.
The agreement comes after the Egyptian pound, which remained steady against the dollar for two months, slid 2.2% against the dollar this week. It was its biggest weekly decline since March 2017.
Egypt reportedly had begun discussions for the standby loan before the arrival of the coronavirus pandemic and after completing a $12 billion, three-year program with the IMF last year. IT is expected that the Fund would be proposing for at least a moderate currency devaluation.
The standby arrangement (SBA) arrives on top of a $2.77 billion emergency IMF financing for Egypt provided earlier last month.
“The SBA, with requested access of US$5.2 billion supports the authorities’ efforts to maintain macroeconomic stability amid the COVID-19 shock while continuing to advance key structural reforms,” stated IMF official Uma Ramakrishnan.