UPDATED: IMF reaches staff-level agreement with Egypt upon first review of $5.2 bln financing agreement

UPDATED: IMF reaches staff-level agreement with Egypt upon first review of $5.2 bln financing agreement

The International Monetary Fund (IMF) said on Monday it had reached a staff-level agreement with Egypt after the first review of a $5.2 billion financing agreement.

Upon the approval of the executive board, a $1.6 billion tranche will be disbursed, the statement said.

"The Egyptian economy performed better than expected despite the pandemic," the IMF statement said.

"Containment measures, supported by the authorities' effective crisis management, and strong implementation of their policy program helped mitigate the effects of the crisis," the statement added.

The IMF said that Egypt's growth rate is projected to reach 2.8 percent in FY2020/21, with a modest recovery in all sectors except tourism, as the pandemic continues to disrupt international travel. Egypt has recorded a growth rate of 3.6 percent in FY2019/20.

"The Central Bank of Egypt's (CBE) monetary policy remains appropriately accommodative. In this regard, we welcome the CBE's recent interest rate cuts to further support economic recovery amid muted inflation. The exchange rate has modestly appreciated in the wake of an increase in capital inflows. Continued exchange rate flexibility will help absorb external shocks. Egypt's banking system remains liquid, profitable, and well capitalized," the statement concluded.

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