IMF reaches agreement on 2nd tranche of Egypt’s loan

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Fri, 12 May 2017 - 04:42 GMT

BY

Fri, 12 May 2017 - 04:42 GMT

The Central Bank of Egypt - Archive

The Central Bank of Egypt - Archive

CAIRO – 12 May 2017: The International Monetary Fund (IMF) said on Friday that it reached a staff-level agreement with Egypt to provide Cairo with the second $1.25 billion tranche of its three-year $12 billion loan.

The IMF released a statement following the visit made by its delegation to Cairo in order to conduct a review of Egypt’s economic reform program, according to which it would be decided when to disburse the second installment of the loan.

The IMF team led by Chris Jarvis described the agreement reached with Cairo as “a vote of confidence”.

“The Ministry of Finance has drafted a very strong budget. If enacted by Parliament, it will place public debt on a clearly declining path to sustainable levels,” read the statement.

Meanwhile, the IMF hailed the measures taken by the Egyptian government as part of its economic reform program.

The liberalization of the exchange rate, levying the value-added tax (VAT) and cutting energy subsidies “have all had significant effects”, the statement said, pointing out that “foreign exchange shortages are resolved and interbank market activity is recovering.”

“We also welcome the very good progress made on structural reforms, especially Parliament’s approval of the new industrial licensing and investment laws. Both acts will help unlock Egypt's growth potential, attract investors, increase exports and industrial production, as well as create adequate and well-paid jobs to absorb the rapidly growing labor force,” said the statement.

The IMF thanked the Egyptian authorities and the technical teams at the Central Bank of Egypt (CBE) and the Ministry of Finance for their openness during the visit, saying that the Egyptian government’s program will “lay the foundations for strong and sustainable growth that improves the lives of all Egyptians.”

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