Egypt requests assistance from IMF to help cushion Covid-19 blow

The country is seeking a one-year programme as growth is set to slow as tourism revenue takes a hit

This picture taken on April 24, 2020 on the first Friday of the Muslim holy month of Ramadan shows a view of the area around Bab Zuweila (background), one of the remaining gates in the walls of the old medieval city of Egypt's capital Cairo, almost empty due to the COVID-19 coronavirus pandemic.  / AFP / Mohamed el-Shahed
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The Egyptian government has requested assistance from the International Monetary Fund to help alleviate the economic pain caused by the Covid-19 outbreak.

The Arab world's most populous country submitted a request for funding under the IMF's Rapid Financing Instrument and through a Standby Arrangement, the Washington-based lender said in a statement on Sunday.

Egypt's economy "has been impacted by the Covid-19 outbreak, the related global recession, and financial markets turmoil", the IMF's managing director Kristalina Georgieva said in a statement on Sunday, adding that the country's government had "responded quickly and decisively with measures to limit its spread and provide support to affected people and businesses".

“To support these efforts and contain the economic and financial impact of the pandemic, the Central Bank and the Government of Egypt have requested financial assistance from the IMF," Ms Georgieva continued. She expects a funding request through the RFI to be submitted "within the next few weeks", the statement said.

Egypt entered into a three-year programme with the IMF in 2016, gaining access to a $12bn Extended Fund Facility after agreeing to a series of reforms that included a free float of its currency. The reforms helped to end a major dollar shortage, repaired overburdened finances and pulled the country out of an economic crisis, although Egyptians felt pressured by some of the austerity measures.

Before the Covid-19 epidemic, the IMF was forecasting growth of 5.5 per cent for Egypt's economy earlier this year, but this was revised down to just 2 per cent in its latest forecast earlier this month as the country's tourism sector has been hit hard by movement restrictions put in place to try to stop the spread of the pandemic.

Egypt reported more than 4,300 confirmed cases of Covid-19 and 307 deaths as of Sunday, according to Johns Hopkins University which is tracking its spread. More than 1,000 people have recovered.

The IMF is also working with the Egyptian government to conclude a Standby Agreement on its current loans, Ms Georgieva said.

"We fully support the government’s aim to safeguard the significant gains made under the successfully completed three-year Extended Fund Facility last year. This comprehensive package of financial support, if approved, would help strengthen confidence in the Egyptian economy, make further progress to protect the most vulnerable and provide the basis for a strong economic recovery," she said.

"It would also help accelerate Egypt’s reform efforts aimed to support broad-based, job-rich and sustainable growth.”

Earlier on Sunday, Egypt's central bank governor Tarek Amer told a joint news conference held alongside prime minister Mostafa Madbouly that it would seek a one-year support programme from the IMF, according to Reuters.