Egypt asks IMF for 1-year loan amid virus fallout

SAMY MAGDY

CAIRO (AP) — Egypt on Sunday said it had asked the International Monitory Fund for financial assistance to deal with the economic fallout caused by the coronavirus.

Neither Egypt nor the IMF specified the size of the one-year bailout loan, which Prime Minister Mustafa Madbouly said would include “a financial package alongside technical support.”

Egypt has been under a partial lockdown since mid-March, with a curfew in place from 9 p.m. to 6 a.m. Schools, mosques, churches and archaeological sites are closed, although many businesses remain open during the day.

With tourism and aviation at a standstill, the partial lockdown threatens the livelihoods of many of Egypt’s 100 million people. One in three Egyptians were already living in poverty before the outbreak, according to government figures.

Madbouly told a news conference that the IMF loan would be a “proactive step” against potential repercussions on Egypt’s economy and protect foreign currency reserves, as well as to preserve the gains made during economic reforms in recent years.

Egypt secured a $12 billion bailout package from the IMF in 2016. As part of the reform program, the government floated the currency, slashed subsidies on fuel, services and utilities, and imposed a value-added tax.

The economic reforms won President Abdel Fattah el-Sissi lavish praise from Cairo’s western backers and bankers. But the austerity measures have caused widespread price hikes that have taken a heavy toll on poor and middle-class Egyptians.

IMF Managing Director Kristalina Georgieva said in a statement that the emergency financing would allow the government to address any immediate balance of payments needs, and support the country’s macroeconomic policies.

“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.

Georgieva praised el-Sissi for“quickly and decisively” responding to the outbreak with measures to “limit its spread and provide support to affected people and businesses.”

Egypt has allocated 100 billion Egyptian pounds (over $63.5 million) to overcoming the virus and its effects. The country's Central Bank ordered the largest interest rate cut in its history and the government has begun paying informal workers 500 Egyptian pounds (around $32) per month in unemployment benefits for three months.

Egypt, the Arab world's most populous country, has more than 4,500 coronavirus cases, including dozens of foreigners, and at least 317 deaths.