Egypt expecting $2b IMF loan

Country also planning to issue $2b to $3b in international bonds in September or October

Egypt expects to receive at least $2 billion (Dh7.34 billion) within two months of agreeing a three-year $12 billion loan programme with the International Monetary Fund, a senior finance ministry official said yesterday.

Egypt announced late on Tuesday it was seeking $4 billion a year over three years from the International Monetary Fund to help plug a funding gap and restore market stability. The government hopes to finalise the deal when an IMF team begins a twoweek visit to Cairo on July 30.

In a news conference yesterday, deputy finance minister for monetary policy Ahmad Kojak, said that each tranche of the IMF loan would have to repaid within five years including a three-anda-quarter year grace period.

Egypt has already said it expected to secure the IMF lending programme at interest rates as low as 1 or 1.5 per cent.

The country is also planning to issue $2 billion to $3 billion in international bonds in September or October. Kojak said Egypt would next week begin seeking international institutions to arrange that Eurobond issue.

Kojak said the proposed IMF deal was only part of Egypt’s programme to turn Egypt’s economy will grow at a slower rate of 3.5 per cent over the 2016/17 fiscal year, missing the government’s target of around 5 per cent and dipping below last year’s growth rate forecast, a Reuters poll found.

The poll, which surveyed 13 analysts, predicts that growth will pick up the following year to reach 4 per cent, unchanged from previous predictions. It also expects growth to reach 4.5 per cent in 2018/19.

Egypt’s economy grew 4.5 per cent in the first half of the financial year 2015/2016, which ended in June. Official figures for the full year have yet to be published. around its economy.

Egypt is also expecting the African Development Bank to approve in September the release of the second tranche of a $1.5 billion three-year loan programme, Kojak said.

Another finance ministry official said the release of those funds depended on Egypt implementing eight reforms including in the energy, electricity, trade and industry sectors.

The country plans to introduce a long-awaited fuel smart card system in the 2016-17 fiscal year which began this month, Kojak said. The cards are part of a wider effort to reform the country’s subsidy programme, which eats up a large chunk of public spending.