IMF clears way for $2 bn loan payment to Egypt

IMF clears way for $2 bn loan payment to Egypt
The IMF has finalised the details required to approve the next $2 billion loan payment to Egypt.
2 min read
26 January, 2019
The loan program for Egypt was signed in November 2016 [Corbis]
The International Monetary Fund has cleared the way to approve the next $2 billion loan payment to Egypt, IMF chief Christine Lagarde announced Friday.

"The IMF staff team has now finalised the details required" to present the accord to the IMF board for approval, Lagarde said in a statement.

"The board will meet in the coming weeks to discuss the review and I will recommend that the Board approve the review."

The loan program for Egypt was signed in November 2016 and with this payment Cairo will have received $10 billion of the $12 billion total.

Since the 2011 revolt that toppled former president Hosni Mubarak, the economy of the Arab world's most populous country has received multiple shocks caused by political instability and security issues.

Egypt has imposed harsh austerity measures to try to right the economy and reduce the budget deficit. It floated the currency and started to phase out subsidies on many goods and services, including hiking fuel prices as much as 50 percent, and electricity rates by about 25 percent.

Lagarde praised the "substantial progress" made by the Egyptian government on the reforms, which have boosted growth and cut unemployment to the lowest rate since 2011.

But she said, "It is important to build on the progress achieved thus far and to press ahead with structural reforms that facilitate private sector-led growth and job creation.”

In September, a World Bank court fined Egypt over $2 billion for failing to supply natural gas to a Spanish-Italian-owned plant in the chaos that followed the 2011 uprising in the country.

The International Centre for Settlement of Investment Disputes ruled Cairo must pay the hefty fine to Union Fenosa Gas - a joint venture between Spain's Naturgy and Italy's Eni - The Financial Times reported.

The ruling has come after Egypt stopped supplying the venture's plant in the northern city of Damietta as the country faced internal energy shortages in 2012.

Union Fenosa Gas filed the case against Egyptian authorities in 2014.

The report said Egypt will likely pay the fine by renewing gas supplies to the natural gas plant.

In early 2018, a Swiss court ordered Egyptian energy companies to pay $3 billion in compensation to Israeli companies after Egypt cut off supplies of natural gas in 2012.

Egyptian authorities raised natural gas prices for households and businesses in July by up to 75 percent.

Follow us on Twitter: @The_NewArab