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10 Vol.1, Issue 22, August 2020 ELITE

EGYPT & THE IMF LOANS :

TAKE 2

SALMA BAYOUMI

During Covid-19 crisis and its impacts on various sectors of the will be no additional procedures for pricing fuel or
global economy in general and the Egyptian economy specially.
electricity, in order to remove any obstacle that may prevent
Egyptian government could not find any solution except
citizens from having their basic needs.
requesting a loan from the International Monetary Fund in order to
maintain its economic stability while facing this pandemic. Now
Among those steps, there are also a package of steps aimed
will this loan help to overcome the crisis and be considered a sign
to enhance accountability mechanisms for the state’s public
of confidence that helps Egypt to obtain financing from
finances in order to solve the problem of corruption that can
institutions and other countries, or will it create an additional
be considered as a crisis in Egypt for ages. In the credit
burden on the Egypt in addition to its total debts?
readiness agreement, financial information will be published
in detail for financial and economic institutions owned by
On June 26, the Executive Board of the International Monetary
the government, it also includes amendments to a number of
Fund announced that they agree to give Egypt a loan consists of
laws, such as the Egyptian Competition Protection Law, the
5.2 billion US dollars according to the credit readiness
Public Finance Management Law, and the change of some
agreement.This agreement has three phases, the first phase has a
accounting rules.
value of 2 billion dollars, the next two phases will be given after a
performance review, and we will start repayment in September
We have in Egypt high public debt and needs for financing
2023.
as well. This is always one of the biggest problems facing
Egypt was achieving high growth rates as it was committed to the the Egyptian economy. Egypt has succeeded in reducing
economic reform plan before Corona virus crisis. After that crisis public debt in previous years but unfortunately, after the
occurred, structural changes have occurred all over the world not
Corona pandemic the public debt has increased. Therefore,
only in Egypt so the Egyptian government has signed a credit
the main purpose of this loan is to fill part of Egypt’s need
readiness agreement to maintain Economic stability, reduce
for financing during the pandemic, support the health sector
inflation , maintain exchange rate flexible and protect spending on
and support the sectors affected by the epidemic crisis to
social and health aspects.
make the public debt decline in order to reduce the risk of
sustaining those debts.
Like other loans, it creates more burdens on the whole country which will
be reflected on citizens so this made the Egyptian government focus on
In case of implementing reform plans and the agreement,
how to reduce the impact of debts on citizens. The government adopted
this loan would not create new burdens. However, if current
some steps to implement them including improving social protection and
crisis did not end, it will not only affect the debt issue but
spending on the health sector and affected sectors during this crisis and
also the entire Egyptian economy and its path of growth.
there
Vol.1, Issue 22, August 2020