Hours ago, the International Monetary Fund announced that its Executive Board has approved emergency financing of $ 2.77 billion to help Egypt overcome the repercussions of the novel coronavirus pandemic, which caused the suspension of tourism and caused a big transfers of capital.
The IMF said that it remains in close contact with the government of Egypt and its central bank, and it is ready to provide more support when needed.
The financial assistance was approved under the Rapid Financing Instrument (RFI), which entails exceptional access due to outstanding credit under the previous extended arrangement under the Extended Fund Facility.
The statement of IMF noted that Egypt achieved a remarkable turnaround prior to the COVID-19 shock, carrying out a successful economic reform program supported by the IMF’s Extended Fund Facility (EFF) to correct large external and domestic imbalances.
"The RFI will help alleviate some of the most pressing financing needs, including for spending on health, social protection, and supporting the most impacted sectors and vulnerable groups," the statement read.
Following the Executive Board discussion, Mr. Geoffrey Okamoto, First Deputy Managing Director and acting Chair, said: “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 programs to protect the most vulnerable. Similarly, the Central Bank of Egypt adopted a broad set of measures, including lowering the policy rate and postponing repayments of existing credit facilities."
He added that the Egyptian authorities are committed to full transparency and accountability on crisis-related spending including through publishing information on procurement plans and awarded contracts, as well as ex-post audits of such spending
He noted that Egypt will need "additional rapid support" from bilateral creditors and multilateral institutions to bridge the remaining gap in its balance of payments, reduce the burden of structural adjustment and maintain the macroeconomic stability it has worked hard.
Okamoto said that the new loan will help the Egyptian authorities to continue spending on health and social protection, support the most affected sectors and vulnerable groups, and restrict the decline in international reserves.
He said that as the crisis recedes, it will be important for Egypt to resume measures to reduce its debt level and continue to implement structural reforms.
Official data in Egypt
The Ministry of Health announced 346 new cases of Corona virus today, bringing the total number of confirmed cases to 9746, of whom 533 died.
The pandemic led to the closure of the tourism sector in the country, which is a vital source of foreign exchange earnings, and threatens the income of the Suez Canal and remittances from Egyptians working abroad.
Egypt's foreign exchange reserves fell to $ 37 billion, from more than $ 45.5 billion at the end of February.
The government has taken steps to contain the spread of the virus, including a night curfew and the closure of cafes and mosques, but it has not gone as far as imposing complete isolation while it seeks to keep the economy in circulation.
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