The US welcomed the International Monetary Fund’s (IMF) approval of almost $2.8bn emergency assistance to help Egypt meet urgent balance of payments needs amid the ongoing global economic uncertainty due to the coronavirus outbreak, said US Ambassador to Cairo Jonathan Cohen.
The IMF’s Executive Board has approved Egypt’s request for emergency assistance of SDR 2,037.1m ($2.772bn) under the fund’s Rapid Financing Instrument (RFI).
Cohen added that the US supported Egypt’s financing request, stressing that the two countries will continue to partner to support the latter’s economic development.
The IMF said, in a press release issued on 11 May, that Egypt achieved a remarkable turnaround prior to the pandemic, carrying out a successful economic reform programme supported by the IMF’s Extended Fund Facility (EFF) to correct large external and domestic imbalances.
Egypt last month requested fresh assistance from the IMF under both a stand-by agreement and the RFI, saying it was needed to shield the Middle East’s fastest-growing economy from the pandemic fallout.
IMF said the pandemic posed an immediate and severe economic disruption that could negatively impact Egypt’s hard-won macroeconomic stability if not addressed. The Fund added that the RFI will help alleviate some of Egypt’s most pressing financing needs, including spending on health, social protection, and supporting the most impacted sectors and vulnerable groups.
Also, the IMF will remain closely engaged with the Egyptian government and the Central Bank of Egypt (CBE), to provide policy advice and further support, as needed, the statement read.
“The COVID-19 pandemic has drastically disrupted people’s lives, livelihoods, and economic conditions in Egypt. The global shock has resulted in a tourism standstill, significant capital flight, and a slowdown in remittances, resulting in an urgent balance of payments need,” said Geoffrey Okamoto, First Deputy Managing Director and acting Chair.
He added, “The government of Egypt has responded to the crisis with a comprehensive package aimed at tackling the health emergency and supporting economic activity. The authorities acted swiftly to allocate resources to the health sector, provide targeted support to the most severely impacted sectors, and expand social safety net programmes to protect the most vulnerable.”
Okamoto also said that the CBE had adopted a broad set of measures, including lowering the policy rate and postponing repayments of existing credit facilities,” he added.