In 2016, Egypt received a $12 billion bailout from the IMF as President Abdel Fattah El Sisi’s government embarked on an ambitious reform programme.
Saudi Arabia has decided to prolong the terms of a $5 billion aid package to Egypt, which was agreed on in March, to bolster Egypt’s recently signed IMF agreement.
The Saudi Press Agency reported that Egypt would open ‘new financing channels with regional and international organisations as part of an extension to the three-year programme. That move would also help finalise a preliminary $3 billion agreement with the International Monetary Fund that was reached in October, the most populous country in the Middle East.
The Egyptian state media have not yet commented on the announcement, and Saudi Arabia provided no further details on the terms of the extension.
The economy of Egypt has been seriously affected by the coronavirus outbreak and the conflict in Ukraine. Because most wheat imports come from Russia and Ukraine, the Egyptian economy has been affected by the conflict and outbreak of the coronavirus.
Egypt has struggled to tame soaring inflation, which reached 16 per cent in October because of the conflict. The country’s inflation problem and ailing economy are to be addressed over the next 46 months through Egypt’s ‘staff level agreement’ with the IMF.
Egypt’s government has agreed to immediately implement a series of economic reforms, including an increase in key interest rates and a move towards a more flexible exchange rate. In 2016, President Abdel Fattah El Sisi’s government initiated an extensive reform programme, resulting in massive price increases. Egypt received a $12 billion IMF bailout.
Image Credit: AP Photo/Vadim Ghirda, File