The International Monetary Fund (IMF) has approved over $2.7 billion loan for the north African country of Egypt to respond to COVID-19 economic crisis.
More than 40 African countries have applied for loans from the IMF to respond to COVID-19 and most of those loans, including the $3.4 billion loan to Nigeria, have been granted or in the process of being granted.
IMF often casts the loans as “financial assistance” with very limited information on repayment conditions.
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The Executive Board of the IMF approved Egypt’s request for emergency financial assistance of $ 2.772 billion under the Rapid Financing Instrument (RFI), an IMF arrangement that offers funding without the strings of a full program.
According to the IMF, the pandemic and global shock pose an immediate and severe economic disruption that could negatively impact Egypt’s hard-won macroeconomic stability if not addressed.
The IMF said the RFI “will help alleviate pressing financing needs, including for health, social protection, and supporting the most impacted sectors and vulnerable groups.”
Mr. Geoffrey Okamoto, First Deputy Managing Director and acting Chair, said the COVID-19 pandemic has “drastically disrupted people’s lives, livelihoods, and economic conditions in Egypt.”
The global shock has resulted in a tourism standstill, significant capital flight, and a slowdown in remittances, resulting in an urgent balance of payments need, Okamoto said.
“Emergency support under the Rapid Financing Instrument will help limit the decline in international reserves and provide financing to the budget for targeted and temporary spending, aimed at containing and mitigating the economic impact of the pandemic. The authorities are committed to full transparency and accountability on crisis-related spending including through publishing information on procurement plans and awarded contracts, as well as ex-post audits of such spending,” he said.
According to him, “as the crisis abates, measures to lower the debt level would need to resume along with continued implementation of structural reforms to increase the role of the private sector to achieve higher and inclusive private sector-led growth and job creation, unlocking Egypt’s growth potential and entrenching resilience.”