IMF Okays $2 Billion Bailout Loan for Egypt

The latest review by the International Monetary Fund has found that Egypt’s economic reforms are on track, paving the way for the transfer of another $2 billion loan disbursement, part of a three-year, $12-billion bailout loan to support the country’s battered economy.

The IMF said the transfer would bring the total payout to Egypt since it secured the loan in November 2016 to $6.08 billion. Egypt expects the payment to be made by January, AP reported.

“Egypt’s reform program is yielding encouraging results. The economy is showing welcome signs of stabilization,” the Washington-based lender said in a statement. It hailed the country’s recovering GDP growth, the moderation of inflation and an increase in foreign reserves to more than $36 billion, their highest level since 2011.

Egypt’s inflation rate declined to 25.98% in November, the central bank announced earlier this month, down from 30.82%. President Abdel-Fattah el-Sisi, who masterminded the politically sensitive reforms, said in September that the government is targeting an inflation rate of 13% by the end of 2018.

The government last summer raised electricity charges by more than 40% and hiked gasoline prices by up to 55% while doubling the price of gas canisters used for cooking. The hikes were part of the reforms introduced so the country can be eligible for the IMF’s loan.

Economic reforms, mostly reduction in state subsidies on basic commodities, started shortly after el-Sisi took office in 2014 but they were accelerated last year.

Among other measures taken to vitalize the economy are the introduction of value added tax, or VAT, and the floatation of the currency that led to the Egyptian pound’s loss of half its value and triggering a significant hike in prices.