IMF confirms $3b loan for Egypt, welcomes exchange rate flexibility

IMF confirms $3b loan for Egypt, welcomes exchange rate flexibility

Egypt's currency fell by about 13.5% to a record low against the dollar after new forex regime

The IMF arrangement is expected to "catalyse a large multi-year financing package," including about $5 billion in the financial year-ending in June 2023

By Reuters Published: Thu 27 Oct 2022, 4:09 PM Last updated: Thu 27 Oct 2022, 4:13 PM

The International Monetary Fund said on Thursday it had agreed a $3 billion Extended Fund Facility (EFF) over 46 months with Egypt, welcoming a move to "durable exchange rate flexibility" regime and commitments to boosting social protections.

Egypt's currency fell by about 13.5% to a record low against the dollar on Thursday, Refinitiv data showed, after the central bank said it had moved to the new regime in advance of the deal's announcement and raised interest rates by 200 basis points.

The arrangement is expected to "catalyse a large multi-year financing package," including about $5 billion in the financial year-ending in June 2023, reflecting broad international and regional support for Egypt, the IMF said in a statement. It also said there were discussions for an additional $1 billion from the fund's Resiliance and Sustainability Facility.

The Egyptian government's fiscal policy under the EFF would be anchored to the reduction