IMF approves USD3b loan to Egypt

06 Jun 2011

(MENAFN) The International Monetary Fund’s (IMF) deputy director for the Middle East and Central Asia, Ratna Sahay, said that the IMF would lend Egypt USD3 billion in order to boost the country’s economic recovery, reported Associated Press.

Sahay added that the loan, which should be approved by the IMF’s executive board in July, would aim to support social justice by increasing spending on health, education, housing and transportation.

On the other hand, Egypt’s Finance Minister, Samir Radwan, said that the twelve months agreement would cover the fiscal year 2011-2012 which would start this July with a 1.5 percent annual interest rate, adding that the loan would be paid back over the span of five years and payments would start after three years and three months from the disbursement date.

Radwan also said that the government’s forecasted budget deficit would be around 11 percent of Egypt’s gross domestic product (GDP) as demands to enhance social services spending went up while the country faced a shortage in resources.

It is worth noting that under the draft budget, revenues would be expected at USD59 billion while expenditures come in at USD87 billion. Moreover, revenue increases will come through tax reforms, compliance and administration, whereas the deficit will be financed to some extent through foreign grants and loans.