Egypt’s IMF deal to reduce govt debt

IMF does not require Cairo to cut spending on subsidies

CAIRO:

The International Monetary Fund’s new $3 billion financial support package for Egypt aims to reduce government debt to less than 80% of gross domestic product (GDP) in the medium term, a cabinet report released on Saturday said.

The IMF did not require the Egyptian government to cut spending on subsidies, the report said, adding that the new programme aimed to strengthen the social protection network for citizens.

The IMF executive board approved on Friday a 46-month, $3 billion financial support package for the Arab world’s most populous country, saying it would catalyse additional funding of about $14 billion.

Egypt negotiated its latest IMF loan as the economic fallout from the war in Ukraine exacerbated a foreign currency shortage resulting from Egypt’s large trade deficit.

In a background document on Egypt, the IMF said the new programme would fund some of the country’s foreign currency financing gap, and that Cairo had secured $5 billion in new financing for the fiscal year ending in June 2023. Of that, $2 billion would come from the sale of equity in private sector companies.

Published in The Express Tribune, December 18^th, 2022.

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