IMF has not received Egyptian loan request

25 April 2016

The Washington-based fund will consider a loan if Egypt requests it

Egypt has not formally asked the Washington-headquartered IMF for a loan, according to Masood Ahmed, the fund’s director for the Middle East and Central Asia Department.

“On Egypt, there’s no change in the partnership and we continue to have technical discussion with the central bank,’’ Ahmed told a press conference in Dubai, adding that there has been no “formal request for an IMF-supported loan’’ from the North African nation. The IMF, however, will consider the loan proposition if Egypt requests it, he said.

A Central Bank of Egypt spokesman told MEED in March that the country had not sought a loan from the IMF at that point. Egypt has a good relationship with the fund and “future agreements could be possible”, the spokesman said in a statement at that time.

Egyptian authorities have so far managed to secure funds from the World Bank, the African Development Bank, China and Saudi Arabia in recent months, but it is still not enough to fill its external financing gap of about $17bn.

Ahmed, who launched the IMF’s updated Regional Economic Outlook report in Dubai on 25 April, said the fund welcomes all the financial aid Egypt is receiving from the Gulf states, which will help it cushion and steer its economy.

Egypt, the Arab world’s most populous country, has faced prolonged political volatility since the 2011 popular uprising, which overthrew the government of President Hosni Mubarak. The country has failed to spur economic growth, with foreign investment having dwindled and tourist numbers falling dramatically, choking two key sources of foreign currency for Egypt.

The country’s tourism sector was heavily affected by the downing of a Russian passenger flight in October last year. The number of foreign tourists visiting Egypt in the first quarter of 2016 fell 40 per cent compared with the same period in 2015.

Egypt’s real GDP is forecast to expand by 3.3 per cent in 2016 despite 4.2 per cent growth in 2015, according to the IMF’s 2016 World Economic Outlook.

The GCC has poured in billions of dollars-worth of aid into Egypt to help stabilise its ailing economy.

The UAE announced an allocation of $4bn to Egypt in late April, half of which will be go to the Egyptian central bank as deposits to support its cash reserves. Cairo will receive the other half as investments.

The announcement, published by UAE’s state news agency WAM, appears to be referring to a previously announced pledge by the UAE to give Egypt $4bn made at an Egypt Economic Development Conference (EEDC) in Sharm el-Sheikh in 2015. Other members of the GCC, including Kuwait and Saudi Arabia, also pledged to provide $4bn of investment and deposits to Egypt at the conference.

Earlier this month, Egypt and Saudi Arabia signed several investment and economic infrastructure development deals, including setting up a SR60bn ($16bn) investment fund to help revive Egypt’s struggling economy.

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