In yesterday’s press conference with the Prime Minister Mostafa Madbouly, the Governor of Egypt’s Central Bank Tarek Amer and several ministers, it was announced that Egypt requested a financial package from the International Monetary Fund (IMF) under the Fund’s Rapid Financing Instrument (RFI) and a Stand-By Arrangement (SBA).
According to a statement by the IMF’s Managing Director, Kristalina Georgieva, many countries including Egypt are being impacted by the global recession and turmoil in financial markets due to the COVID-19 outbreak
“President Abdel Fattah El Sisi and his government have responded quickly and decisively with measures to limit its spread and provide support to affected people and businesses. The Central Bank of Egypt has also implemented timely measures to support the domestic economy,” the IMF statement read.
How Will This Help?
The IMF’s monetary assistance, which would be presented within the next few weeks, would basically address the immediate balance of payments needed, and it would also support the most impacted sectors and most vulnerable people.
In the press conference, Amer explained that this financial program with the IMF would last for a year and that Egypt’s economy is flexible in terms of obtaining international funding to compensate the loss that occurred in some sectors due to COVID-19,” Egypt Today Magazine wrote.
Economically speaking, this financial assistance is going to improve Egypt’s ability in facing COVID-19 when it comes to getting the economy stable once more.
Amer also stressed that Egypt’s banking sector has been prepared to handle the current crisis in the sense that the country has foreign reserves “that exceed the needs of people”, as per Egypt Today Magazine.The report added that Egypt has a capital of more than LE 450 billion in banks and enough foreign reserves to help the economy stabilize.
The Minister of Finance Mohamed Ma’it said, “the deal with IMF has technical and financial parts with the aim to maintain the confidence of the market, and positives and gains of economic reform program.”
Egypt’s Economy Status Amid COVID-19
It goes without saying that all economies around the world are suffering but Egypt may have a different ending. Egypt Independent wrote that the IMF’s April World Economic Outlook Report said that COVID-19’s isolation measures have impacted the economy greatly.
However, it also said that, “the report expects Egypt will be the only Arab country to register economic growth, which is expected to be two percent in 2020 and to jump to 2.8 percent in 2021.”
Many well renowned economists and Business-oriented publications have compared the impact COVID-19 had on the economy to that of the Great Depression.
Being a country invested in tourism, Reuters reported that 12- 15 percent of Egypt’s gross domestic product comes from the tourism industry.
This is not the first time Egypt requests monetary assistance from the IMF. Back in 2016, the IMF approved a three-year extended arrangement under the Extended Fund Facility (EFF) for Egypt at an amount equivalent to $12 billion.
From then on, Egypt has been recognized for ‘bold’ economic reform that began with the flotation of its currency and included imposing taxes and cutting energy subsidies.
