The International Monetary Fund (IMF) board will meet on Friday to discuss Egypt’s request for financial assistance, IMF director Christine Lagarde said on Tuesday, adding that she will recommend that the loan be approved.
In mid-August, Egypt reached a staff-level agreement with the IMF on a $12 billion fund facility over three years, which is currently awaiting the fund's executive board approval.
“I will recommend that the board approve Egypt’s request in support of this ambitious economic reform programme that will help restore macroeconomic stability and bring Egypt’s economy closer to its full potential,” Lagarde said in a press statement after Egypt floated its currency last Thursday and increased the prices of subsidised fuel.
The IMF chief said that the new measures implemented by the Egyptian government would “put the country’s economy on a sustainable path and achieve job-rich growth.”
She added that the liberalisation of the exchange rate would improve “Egypt’s external competitiveness, address shortages of foreign currency, support exports and tourism and help attract foreign investment.”
Last week, the IMF welcomed Egypt's central bank decision to float the country's pound, saying that it would “boost competitiveness and attract foreign investment.”
The IMF has endorsed Egypt's fiscal reform programme, which the government embarked on in 2014 in an attempt to curb the growing state budget deficit, estimated at 11.5 percent of GDP in 2015/16.
The programme includes cutting subsidies and the introduction of new taxes, such as the newly ratified value-added tax.
Egypt relies heavily on imports, mostly food, and has been suffering from an acute foreign currency shortage since the 2011 revolution and the following unrest, which have spooked investors and tourists.
