Egypt’s IMF loan to be re­paid in 10 years

Kuwait Times - - BUSINESS -

Egypt’s $12 bil­lion three-year IMF loan pro­gram will be re­paid in 10 years with a 4.5 year grace pe­riod and the re­forms agreed with the in­ter­na­tional lender aim to boost growth and curb in­fla­tion, the fi­nance min­istry said yes­ter­day. It said the re­forms tar­get GDP growth of 5.5 per­cent and in­fla­tion of less than 10 per­cent by the 2018-19 fis­cal year. The In­ter­na­tional Mon­e­tary Fund ap­proved on Fri­day a pro­gram aimed at help­ing Egypt close its bud­get gap and re­bal­ance its cur­rency mar­kets. Egypt’s head­line in­fla­tion was near 14 per­cent in Oc­to­ber and the econ­omy grew 4.3 per­cent in the 2015-16 fis­cal year.

Mean­while, Egypt’s stock mar­ket rose sharply early yes­ter­day in heavy vol­ume, head­ing for a 12th straight ses­sion of gains fol­low­ing the In­ter­na­tional Mon­e­tary Fund’s ap­proval of a three-year, $12 bil­lion loan for the country. The IMF has al­ready dis­bursed an ini­tial in­stall­ment of $2.75 bil­lion to Egypt’s cen­tral bank. The IMF loan ap­proval had been widely ex­pected, but this plus Egypt’s de­ci­sion to float its cur­rency on Nov. 3 has made in­vestors op­ti­mistic that the mar­ket can look for­ward to ma­jor in­flows of for­eign money.

An­a­lysts at Bank of Amer­ica Mer­rill Lynch rec­om­mended buy­ing Egyp­tian Trea­sury bills un­hedged, re­viv­ing a trade that had been pop­u­lar among for­eign in­vestors be­fore po­lit­i­cal up­heaval in 2011 ush­ered in years of eco­nomic in­sta­bil­ity. Egypt’s bluechip stock in­dex climbed 2.6 per­cent in trad­ing vol­ume that looked set to be the big­gest daily amount on record. Fi­nan­cials and ex­port­ing firms were some of the top gain­ers, with Egypt Kuwait Hold­ing jump­ing 6.3 per­cent and Ara­bian Food In­dus­tries ris­ing as much as its 10 per­cent daily limit. A few blue chips de­clined on profit-tak­ing fol­low­ing strong gains over the past week. Tele­com Egypt was down 1.7 per­cent. The broader stock mar­ket in­dex was up 2.0 per­cent.

Yields on Egypt’s three- and nine-month Trea­sury bills fell yes­ter­day in the sec­ond auc­tion since the cen­tral bank floated the pound cur­rency, with bids sub­mit­ted for ninemonth bills roughly four times more than the amount ac­cepted. Yields on the 91-day bill dropped to an av­er­age of 18.028 per­cent from 19.055 per­cent the last time sim­i­lar bills were sold. Yields on the 273-day bill de­clined to an av­er­age of 18.715 per­cent from 20.367 per­cent at the last sim­i­lar auc­tion. —Reuters

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