Arab Monetary Fund lends Egypt $639m to boost public finance reforms

In June, the IMF approved a 12-month, $5.2bn loan to help the country cope with challenges posed by the virus

The Cairo skyline. Egypt received a $639 million credit facility from the Arab Monetary Fund. Reuters

The Arab Monetary Fund is providing Egypt with a $639 million (Dh2.3 billion) credit facility to help the Arab world’s most populous country reform its public finance sector amid the Covid-19 pandemic.

The loan is intended to support economic, financial and structural reforms, the fund said on Wednesday.

The AMF said financing balance of payments needs and public budgets, and financing trade through its affiliate, the Arab Trade Financing Programme, are among the other ways it is helping member countries face the current economic volatility.

“The AMF is keen to provide financial and technical support to its member countries … in light of the developments taking place due to Covid-19, and the ensuing economic and financial repercussions,” it said.

The AMF said it intends to further boost the measures taken by its members to “stimulate the economy and provide liquidity in order to contain the negative effects of the virus outbreak”.

Egypt was one of the fastest growing emerging markets before the Covid-19 outbreak.

However, the significant domestic and global disruptions caused by the pandemic have worsened the country's economic outlook and forced officials to rethink their policies.

The North African country has made significant progress in restructuring its economy under a three-year International Monetary Fund programme reached in 2016.

The $12bn Extended Fund Facility helped Egypt float its currency, end major dollar shortages and repair overburdened finances.

The IMF also approved a new 12-month $5.2bn loan for Egypt in June to help it cope with challenges posed by the pandemic and finance its budget deficit and balance of payments shortfalls.

The approval allows for the immediate disbursement of about $2bn, which will help the country preserve the macroeconomic reforms it has carried out over the past four years, according to the fund.

The arrangement is also intended to support health and social spending and advance structural reforms for sustained recovery.