The Institute of International Finance (IIF) is expecting the International Monetary Fund (IMF) to approve the provision of $2.8bn to Egypt under the Rapid Financing Instrument (RFI).
The funds, which are 100% of the quota, will be made available for Egypt to address the economic impacts of the ongoing coronavirus (COVID-19) pandemic.
In its latest report, entitled “Egypt: IMF Support Critical” published on 3 May, the IIF is further anticipating that the IMF will approve a Stand-by Arrangement (SBA). The arrangement is likely to last for two years, and with cumulative access of 200% of quota.
The report highlighted that the RFI purchase would facilitate increased health spending, a stronger social safety net, and assistance to small- and medium-sized enterprises (SMEs) to mitigate fallout from the crisis. It would also provide a backstop against the decline in official financial reserves.
The report noted that demand and supply shocks related to the virus will see lower global trade, tourism, remittances, and tighter global financial conditions.
“Egypt’s IMF Extended Fund Facility (EFF) programme (2017-2019) was largely seen as a success story,” the report said. “As the COVID-19 crisis abates, there is need to proceed with new procedures to support further private sector development and job creation under the requested stand-by arrangement.”
The report added that, despite the limited fiscal space and high public debt, Egypt has expanded social programme, with focuses on tackling health emergency and supporting the most vulnerable.