Christine Lagarde, the IMF’s managing director, will recommend that its board approves the US$12 billion loan to Egypt after the North African country floated its currency and further liberalised fuel prices.
IMF’s executive board will meet on Fridayto discuss the aid package to Egypt, which is needed to alleviate a US dollar shortage and help the country attract much-needed hard currency and investments.
“The liberalisation of the exchange rate and the adoption of the second phase of the fuel subsidy reforms are important measures in the authorities’ reform agenda,” Ms Lagarde said on Tuesday in a statement.
“I will recommend that the Board approve Egypt’s request in support of this ambitious economic reform programme that will help restore macroeconomic stability and bring Egypt’s economy closer to its full potential.”
Egypt floated its currency last week, letting the pound fall from its previous peg of 8.8 to the dollar as a step aimed at securing the IMF loan.
Egypt has also announced a 30 per cent to 47 per cent hike in fuel prices to relieve pressure on its public finances.
Egypt is grappling with a dollar shortage after the economy was hit by lower tourism receipts, a dearth of investments and lower remittances from Egyptians abroad in the wake of the 2011 revolution.
The government is trying to juggle slower economic growth, a yawning fiscal deficit, and the lack of investor confidence in the economy.
dalsaadi@thenational.ae
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