CAIRO (AP) — The International Monetary Fund said Friday it has reached an agreement with authorities in Egypt to allocate $5.2 billion to help the country cope with the economic fallout of the coronavirus outbreak.
“This will safeguard the gains achieved by Egypt over the past three years and put the country on strong footing for sustained recovery,” said Uma Ramakrishnan, the IMF’s chief of mission for Egypt.
The agreement, which must go to the executive board for final approval, comes on top of a $2.77 billion IMF loan approved to Egypt last month.
Egypt, the Arab world’s most populous country, emerged last year from an ambitious reform program designed to overhaul its ailing economy.
As part of a $12 billion bailout from the IMF in 2016, the government introduced a tough diet of austerity measures, hiking up prices, slashing key subsidies and imposing a value-added tax. The steps proved painful for poor and middle class Egyptians, but won President Abdel Fattah el-Sissi praise from western backers and bankers.
Now, the dire financial consequences of the COVID-19 outbreak threaten to reverse the country’s progress, a worrisome prospect for el-Sissi. Even before the pandemic, one in three Egyptians lived below the poverty line, according to government figures.
The economic lockdown has undercut the state’s critical sources of currency: revenue from tourism to the country's ancient wonders, which account for 12% of the gross domestic product, remittances from workers abroad, foreign investment and shipping fees from the Suez Canal. The Central Bank said that Egypt’s foreign reserves fell by some $8 billion over the course of March and April.
Although the government has resisted a harsh lockdown to prevent financial collapse, it may be paying the price in increased infections. Egypt, with 31,000 cases, has the highest announced deaths from COVID-19 in the Arab World, and the third in the Middle East behind Iran and Turkey, according to a tally by The Associated Press. Last week, its daily case count doubled.