After six months the International Monetary Fund (IMF) will review the reforms made by the Egyptian government before making available the second tranche of the $12bn loan.
“The IMF needs to evaluate the economic reforms of the Egyptian government,” said IMF Managing Director Christine Lagarde on Saturday in Washington DC.
The Annual Meetings of the International Monetary Fund and World Bank Group are currently taking place in Washington DC. The meetings will run from 7-9 October.
Lagarde noted that once the Egyptian government completes the required procedures, such as reforming subsidies and applying the value-added tax (VAT), the executive board will meet to approve the second tranche of the loan.
Lagarde hopes that the Egyptian government will take the steps necessary in order to receive the next portion of the loan.
Masood Ahmed, the director of the Middle East and Central Asia Department at the IMF, said on Friday that the first tranche of Egypt’s loan, which is worth $2.5bn, will be made available immediately after the agreement is signed.
Egypt’s loan will be presented to the fund’s executive board at the end of October or early November, said Ahmed.
Egypt promised to implement a number of reform measures in order to obtain the IMF loan, including the flotation of the Egyptian pound.
Despite expectations, the Central Bank of Egypt ended its week on 6 October without modifying the exchange rate between the Egyptian pound and the US dollar.
Seeing through one of the loan’s conditions, the Egyptian parliament on 29 August approved the VAT Law at 13%, which will be increased to 14% in FY 2017/2018. The Ministry of Finance announced the application of the VAT in October, but it reconsidered its decision and applied the tax in September.