Egypt expects $1.5 bn in aid by year-end, eyeing IMF
Egypt is implementing a series of reforms aimed at reviving its economy after the 2011 uprising that ended Hosni Mubarak’s 30-year rule frightened off tourists and foreign investors, on which it relies for foreign currency earnings.
There are three main advantages to this programme
Foreign currency reserves, which stood at about $36 billion before the uprising, were $16.42 billion at the end of November despite billions of dollars in Gulf Arab aid that Egypt has received since mid-2013.
A foreign currency shortage has crippled import activity this year and the country is struggling to pay for supplies of energy, which drain some $700 million to $1 billion a month.
The minister said she had negotiated loans with the World Bank and AfDB worth $3 billion and $1.5 billion respectively, to be disbursed over three years with the first tranche arriving “within days” of the deals being signed later this month. The economic reform programme Egypt launched in June 2014 helped it secure the aid without a list of specific conditions.
“If you already have done an integrated reform programme with a clear timeline … you would not call it a conditionality because it has already been achieved,” Nasr told Reuters on the sidelines of the Egypt Mega Projects conference in Cairo.
She said the first effect of the loan would be to bring much-needed foreign exchange into Egypt: “There are three main advantages to this programme. First, it will bring in foreign currency, quick foreign currency.”
Though the money has not been ring-fenced to help Egypt pay some $2.7 billion owed to international oil companies or to purchase petroleum products, it will ease pressure on foreign reserves and implicitly free up more cash for energy imports.
Asked if Egypt planned to turn to the International Monetary Fund for further financing, Nasr said the decision was one that should be taken collectively by the government and only pursued with the support of the Egyptian people.
“It is one of the options we are discussing, and it is very good we will be discussing it when the parliament is in place as you need to get the people’s consent, and that would be a prerequisite,” she said.
But the benefits of an IMF package would have to be compared with other sources of aid: “Nothing is ruled out … I am presenting all the different options to the economic ministerial cabinet to discuss the pros and cons.”
Egyptian officials have said in the past that they would not rule out an IMF financing package, although no requests have been made and no concrete plans drawn up.
In total, Egypt has signed off on some $4 billion of investment loans this year in addition to the budgetary support deals from the World Bank and AfDB, Nasr said. Egypt also expects to receive 370 million euros in budget support from the European Union over three years, Nasr said, without elaborating.