Egypt to get $20bn loan from global funders says minister

Reuters/Susana Vera

The expanded loan facility from the International Monetary Fund (IMF) will allow Egypt to receive more than $20 billion in additional funding from global financial institutions.

The additional funding is expected from the World Bank, the European Union (EU), the African Development Bank, the Arab Monetary Fund and others, finance minister Mohamed Maait told a press conference.

The North African country expects to receive $3 billion from the World Bank, he said, adding the details of the EU package will be announced soon.

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The IMF last week said that Egypt will receive an expanded $8 billion loan from the IMF after agreeing to implement a set of reforms and policies.

Maait said the IMF would release the first tranche of funding under the new programme after its board approves the expanded facility. 

UAE sovereign fund ADQ has unveiled plans to invest $35 billion in building Egypt’s “largest new city” to promote tourism and drive economic growth.

“The positive part is the Ras El-Hikma deal, a portion of which will enter the general budget in pounds,” Reuters reported, citing Maait.

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“The total deficit will be less than targeted because of Ras El-Hikma,” he added.

Moody’s has upgraded Egypt’s outlook from negative to positive following the IMF’s expanded $8 billion funding.

The revision reflects the significant official and bilateral support announced and marked policy steps taken this month, which, if maintained, will support macroeconomic rebalancing, the rating agency said.

Capital Economics, the London-based economic analysis company, said in a research note that the IMF announcement, on the back of the rate hike and devaluation on Wednesday, represents a shift towards more orthodox policymaking and should provide international investors with further confidence that Egypt will avoid a sovereign default.

“Admittedly, there have been numerous false dawns for Egypt in the past, and the key will be for officials to stay the course with the orthodox policy shift,” said James Swanston, the consultancy’s Mena economist.