Saudi Arabia agreed on Tuesday to extend the terms of a $5 billion aid package to Egypt in March in a move aimed at bolstering the North African country’s recent deal with the International Monetary Fund.
The Saudi Press Agency said the extension would allow Egypt to open “new financing channels with regional and international organisations” and help with the completion of a preliminary $3 billion agreement the Middle East’s most populous country reached with the IMF in October.
Saudi Arabia provided no further details on the terms of the extension and Egyptian state media have not yet commented on the announcement.
The Egyptian economy has been hit hard by the coronavirus pandemic and the war in Ukraine. Egypt is the world’s largest wheat importer, with most shipments coming from Russia and Ukraine.
Due to the war, Egypt has struggled to combat surging inflation, which peaked at more than 16 per cent in October.
Egypt’s “staff level agreement” with the IMF last month is set to last for 46 months and aims to tackle the country's inflation problem and restructure its ailing economy.
The terms of the preliminary agreement include Egypt’s government introducing a series of immediate economic reforms, including an increase in its key interest rates and a shift towards a flexible exchange rate.
Egypt received a $12 billion bailout from the IMF in 2016, when President Abdel Fattah El Sisi’s government embarked on an ambitious reform programme that caused prices to surge.
About a third of Egypt’s 104 million people live in poverty, government figures show.
